Blog Coverage Pinnacle Foods Completes Pricing for its $2.26 Billion Term Loan

Upcoming AWS Coverage on Kraft Heinz Post-Earnings Results

LONDON, UK / ACCESSWIRE / February 1, 2017 / Active Wall St. blog coverage looks at the headline from Pinnacle Foods Inc. (NYSE: PF) as the Company announced on January 31, 2017, that its indirect wholly-owned subsidiary, Pinnacle Foods Finance LLC, completed pricing for the previously-announced refinancing of its senior secured credit facilities, in a significantly oversubscribed transaction that extended the Company’s maturity profile and improved its outlook for interest expense beginning in February 2017. Register with us now for your free membership and blog access at:

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One of Pinnacle Foods’ competitors within the Food – Major Diversified space, The Kraft Heinz Co. (NASDAQ: KHC), announced on January 25, 2017, that it will release its Q4 and full year 2016 financial results on Wednesday, February 15, 2017, after the close of the US markets. Kraft Heinz will host a conference call at 5:00 p.m. ET that day to review and discuss its results, followed by a Q&A session with analysts. AWS will be initiating a research report on Kraft Heinz in the coming days.

Today, AWS is promoting its blog coverage on PF; touching on KHC. Get all of our free blog coverage and more by clicking on the link below:

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The Launch of Senior Secured Facility

On January 23, 2017 Pinnacle Foods announced that its indirect wholly-owned subsidiary, Pinnacle Foods Finance LLC, intends to launch a refinancing of its outstanding indebtedness under its senior secured credit facilities. The proposed refinancing is expected to result in interest expense comparable to or slightly below FY16, despite the impact of the rising interest rate environment on the Company’s floating rate debt with this announcement, Pinnacle Foods strengthened its outlook for FY16 adjusted diluted EPS to the high-end of its guidance range and indicated that its total net leverage ratio for FY16 is now expected to be below 4.25x, primarily due to strong cash management.

The Pricing

Pinnacle Foods priced the new $2.26 billion Term Loan B, which matures in February 2024, at LIBOR + 200 basis points (with 0% LIBOR floor) and upsized its revolving credit facility, from $150 million to a new $225 million five-year facility. Pinnacle Foods expects the favorable pricing, along with the anticipated $200 million term loan repayment, to now result in interest expense for FY17 to be slightly above $130 million. Pinnacle Foods increased its FY17 guidance for adjusted diluted EPS by $0.03 to a range of $2.46 to $2.51, excluding the $0.05 benefit expected from the adoption of new tax treatment for stock-based compensation expense and any fees and expenses associated with this refinancing.

Pinnacle Foods stated that total pro-forma cash interest savings over the life of the new 7-year loan are expected to be in excess of $50 million. The Company expects to incur cash costs approximating $13 million associated with this refinancing. Pinnacle Foods intends to use the proceeds from term loan B, along with $213 million of cash on hand, to repay its existing senior secured term loan debt totaling approximately $2,462 million aggregate principal amount and transaction fees. The obligation for Pinnacle Foods to repay its existing indebtedness is conditioned upon the completion of the refinancing. The refinancing is expected to close on or about February 03, 2017 and is subject to market and other customary conditions.

Commenting on the announcement, Pinnacle Foods’ Executive Vice President and CFO Craig Steeneck stated:

“We are very pleased with the strong demonstration of support from our banking partners. This transaction will enhance our financial profile and reduce our cash interest expense, improving our already-strong free cash flow and value-creation optionality moving forward.”

Moody’s Rating

On January 23, 2017, Moody’s Investors Service Inc. assigned a Ba2 rating to Pinnacle Foods’ proposed $2.262 billion 7-year senior secured term loan and $200 million 5-year senior secured revolving credit facility. The rating agency denoted the Company’s rating outlook as stable.

Moody’s stated that the stable rating outlook reflects its expectation that Pinnacle Foods will generate positive free cash flow, leverage will decline gradually through earnings growth, and the Company will maintain a solid liquidity profile.

Moody’s noted that a rating upgrade would be considered if the rating agency believes that Pinnacle Foods will reduce and sustain debt to EBITDA below 4.0x. Moody’s also warned that Pinnacle Foods’ ratings could be lowered if weak operating performance or a leveraged acquisition causes the Company’s debt/EBITDA to be sustained above 5.0x.

Stock Performance

On Tuesday, January 31, 2017, the stock closed the trading session at $53.19, marginally up 0.85% from its previous closing price of $52.74. A total volume of 601.20 thousand shares have exchanged hands. Pinnacle Foods’ stock price advanced 4.13% in the last three months, 6.82% in the past six months, and 26.44% in the previous twelve months. The stock is trading at a PE ratio of 31.00 and has a dividend yield of 2.14%.

Earnings Alerts: Pinnacle Foods will release its financial results for Q4 2016 on February 23, 2017, at approximately 6:00 AM ET and will also host a conference call later that morning at 7:00 AM ET to discuss the results.

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