Markets

Berry Plastics Prices $400M Notes to Fund Avintiv Buyout

A stock chart on display
Credit: Shutterstock photo

Berry Plastics Group, Inc.BERY has announced the pricing of $400 million of second priority senior secured notes due 2022. The proceeds from the offering will be utilized to fund a portion of the cash consideration for the Avintiv acquisition.

The closing of the private placement offering is expected to occur on or about Oct 1, 2015. The notes will bear interest at a rate of 6.00% payable semiannually, in cash in arrears, on Apr 15 and Oct 15 of each year. As previously mentioned, in addition to the cash consideration for Avintiv, the proceeds will be used to repay certain existing indebtedness of Avintiv and its subsidiaries and related fees and expenses. The balance, if any, will be used for general corporate purposes.

In case the acquisition is not completed before the offering, all proceeds from the offering will be deposited along with any amounts necessary to redeem the notes, into a segregated collateral account. Amounts held in the collateral account will be pledged for the benefit of the holders of the notes. The finds will be released following the closing of the acquisition.

On release of the proceeds from the collateral account, the notes will be assumed by Berry Plastics' direct and wholly owned subsidiary, Berry Plastics Corporation. The notes will be guaranteed by Berry Plastics and by each of Berry Plastics Corporation's existing and future direct or indirect domestic subsidiaries that guarantee the latter's senior secured, first priority credit facilities.

In July, Berry Plastics announced that it would buy Avintiv, which makes materials used in products ranging from diapers to disinfectant wipes, for about $2.45 billion in cash. Berry Plastics is acquiring Avintiv from private-equity funds managed by Blackstone Group LP. Avintiv has 23 locations in 14 countries and supplies to many of the consumer and industrial product manufacturers that Berry Plastics supplies to. Berry Plastics expects the deal to add to its earnings and free cash flow and stated that it has secured debt financing to fund the deal.

The deal is touted to be Berry Plastic's largest and will expand its reach beyond plastic consumer packaging. It's also the latest in a string of deals in the packaging industry following the merger of Rock-Tenn Company with MeadWestvaco Corporation to form WestRock Company WRK in January. This collaboration has created the second-largest U.S. packaging company worth $16 billion, trailing only International Paper Company, which has a market capitalization of nearly $22 billion.

In September, glass container maker, Owens-Illinois, Inc. OI completed the acquisition of the food and beverage glass container business of Mexican company, Vitro, for $2.15 billion. Beverage can maker Ball Corporation BLL has also announced its intent to buy Rexam for $6.8 billion.

Berry Plastics carries a Zacks Rank #3 (Hold).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BALL CORP (BLL): Free Stock Analysis Report

OWENS-ILLINOIS (OI): Free Stock Analysis Report

BERRY PLASTICS (BERY): Free Stock Analysis Report

WESTROCK CO (WRK): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BERY WRK BLL OI

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More