Berry Global's Unit Announces Redemption of Senior Notes

Berry Global, Inc., a business unit of Berry Global Group, Inc. BERY, recently decided to redeem Second Priority Senior Secured Notes (“notes”), per the terms of the indenture binding the notes. The notes considered for redemption comprise $100 million of total principal amount of its 6.00% notes due 2022.

The redemption price has been set at 101.500% of the total principal amount, along with any accrued and unpaid interest. The redemption date has been set as Jan 21, 2020. The company anticipates $200 million worth of total principal amount of notes to remain outstanding subsequent to the redemption. Notably, it plans to utilize cash on hand for funding the redemption.

It’s worth noting here that on Dec 9, 2019, the company redeemed $100 million of total principal amount of its 6.00% notes due 2022.

Berry Global’s balance sheet is highly leveraged. It had current and long-term debt of about $11,365 million at the end of fourth-quarter fiscal 2019 (ended Sep 28, 2019). The metric reflects an increase of 94.5% from fiscal 2018 end. We believe that the company’s latest decisions to redeem notes will enable it to lower its debt burden.

Over time, the company has solidified its product portfolio and leveraged business opportunities through the addition of assets. In fiscal 2019, acquired assets added 16.7% to sales. In July 2019, the company completed its acquisition of RPC Group Plc. This buyout has been enhancing Berry Global's growth opportunities by creating a leader in the plastic and recycled packaging industry. Also, this buyout will generate annual cost synergies of $150 million, with half of it expected to be realized in fiscal 2020.

In the past three months, this Zacks Rank #3 (Hold) stock has returned 21.5% compared with the industry’s growth of 9.7%.

Stocks to Consider

Some better-ranked stocks from the Zacks Industrial Products sector are Kaman Corporation KAMN, ABB Ltd ABB and Barnes Group, Inc. B. While Kaman currently sports a Zacks Rank #1 (Strong Buy), ABB and Barnes Group carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kaman delivered average positive earnings surprise of 7.72% in the trailing four quarters.

ABB pulled off average positive earnings surprise of 2.89% in the trailing four quarters.

Barnes Group delivered average positive earnings surprise of 4.21% in the trailing four quarters.

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