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Berry Global Group and Glatfelter announced the pricing of an upsized $800 million senior secured notes offering due 2031 by Berry’s subsidiary, Treasure Escrow The notes, bearing 7.250% interest, are part of the previously announced merger of Berry’s Health, Hygiene and Specialties Global Nonwovens and Films business with Glatfelter in a Reverse Morris Trust transaction. The combined company will be renamed Magnera .
The offering, expected to close around October 25, 2024, will fund a cash distribution to Berry Global, Inc., repay Glatfelter’s existing debt, and cover transaction fees. The notes will be secured by various assets and will rank pari passu with Magnera’s new term loan facility and Glatfelter’s existing senior notes. The offering is to qualified institutional buyers and non-U.S. investors.
Berry Global Group e Glatfelter hanno annunciato il prezzo di un’offerta aumentata di 800 milioni di dollari di note senior garantite con scadenza nel 2031, emessa dalla sussidiaria di Berry, Treasure Escrow. Le note, con un tasso d’interesse del 7,250%, fanno parte della fusione precedentemente annunciata tra il business di Berry dedicato alla salute, igiene e prodotti speciali non tessuti e film con Glatfelter in una transazione Reverse Morris Trust. La società combinata sarà rinominata Magnera.
L’offerta, prevista per la chiusura intorno al 25 ottobre 2024, finanzierà una distribuzione in contante a Berry Global, Inc., ripagherà il debito esistente di Glatfelter e coprirà le spese della transazione. Le note saranno garantite da vari attivi e avranno lo stesso rango delle nuove strutture di prestito a termine di Magnera e delle note senior esistenti di Glatfelter. L’offerta è destinata a investitori istituzionali qualificati e a investitori non statunitensi.
Berry Global Group y Glatfelter anunciaron el precio de una oferta aumentada de 800 millones de dólares de notas senior garantizadas con vencimiento en 2031, emitidas por la subsidiaria de Berry, Treasure Escrow. Las notas, que llevan un interés del 7,250%, son parte de la fusión previamente anunciada entre el negocio de Berry en salud, higiene y especialidades de no tejidos y películas con Glatfelter en una transacción Reverse Morris Trust. La empresa combinada se renombrará Magnera.
Se espera que la oferta cierre alrededor del 25 de octubre de 2024, financiará una distribución en efectivo a Berry Global, Inc., reembolsará la deuda existente de Glatfelter y cubrirá las tarifas de transacción. Las notas estarán aseguradas por varios activos y tendrán el mismo rango que la nueva línea de crédito a término de Magnera y las notas senior existentes de Glatfelter. La oferta está destinada a compradores institucionales calificados e inversionistas no estadounidenses.
베리 글로벌 그룹과 글랫펠터는 베리의 자회사인 트레저 에스크로우에 의해 2031년 만기인 8억 달러의 추가된 선순위 담보 채권 발행 가격을 발표했습니다. 7.250%의 이자를 담고 있는 이 채권은 글랫펠터와의 리버스 모리스 트러스트 거래에서 베리의 건강, 위생 및 특수 글로벌 비직조 및 필름 사업의 이전에 발표된 합병의 일부입니다. 결합된 회사는 마그네라로 이름이 변경될 것입니다.
이번 발행은 2024년 10월 25일경에 마감될 것으로 예상되며, 베리 글로벌, Inc.에 대한 현금 배분을 금융 지원하고, 글랫펠터의 기존 부채를 상환하며, 거래 수수료를 충당합니다. 이 채권은 다양한 자산으로 보장되며 마그네라의 새로운 만기 대출 시설과 글랫펠터의 기존 선순위 채권과 동등한 순위를 가질 것입니다. 이번 발행은 자격을 갖춘 기관 구매자와 비미국 투자자에게 제공됩니다.
Berry Global Group et Glatfelter ont annoncé le prix d’une offre augmentée de 800 millions de dollars de notes senior sécurisées arrivant à échéance en 2031 par la filiale de Berry, Treasure Escrow. Les notes, portant un taux d’intérêt de 7,250%, font partie de la fusion précédemment annoncée entre l’activité de Berry dans les secteurs de la santé, de l’hygiène et des spécialités non tissées et films avec Glatfelter dans le cadre d’une transaction Reverse Morris Trust. La société combinée sera renommée Magnera.
L’offre, qui devrait se clôturer autour du 25 octobre 2024, financera une distribution en espèces à Berry Global, Inc., remboursera la dette existante de Glatfelter et couvrira les frais de transaction. Les notes seront garanties par divers actifs et auront le même rang que la nouvelle ligne de crédit à terme de Magnera et les notes senior existantes de Glatfelter. L’offre est destinée aux acheteurs institutionnels qualifiés et aux investisseurs non américains.
Berry Global Group und Glatfelter haben den Preis für ein erhöhtes Angebot von 800 Millionen Dollar an senior unsecured Notes mit Fälligkeit im Jahr 2031, ausgegeben von der Tochtergesellschaft von Berry, Treasure Escrow, bekannt gegeben. Die Notes, die 7,250% Zinsen tragen, sind Teil der zuvor angekündigten Fusion von Berry’s Geschäftsbereichen Gesundheit, Hygiene und Spezialitäten in globalen Vliesstoffen und Folien mit Glatfelter im Rahmen einer Reverse Morris Trust-Transaktion. Das fusionierte Unternehmen wird in Magnera umbenannt.
Das Angebot, das voraussichtlich um den 25. Oktober 2024 abgeschlossen wird, wird zur Finanzierung einer Barverteilung an Berry Global, Inc., zur Rückzahlung von Glatfelters bestehenden Schulden und zur Deckung der Transaktionskosten verwendet. Die Notes werden durch verschiedene Vermögenswerte gesichert und haben den gleichen Rang wie Magnera’s neue Terminkreditfazilität und Glatfelters bestehende Senior Notes. Das Angebot richtet sich an qualifizierte institutionelle Käufer und nicht-US-Investoren.
Positive
- Upsized offering from $500 million to $800 million indicates strong investor interest
- 7.250% interest rate secured in current market conditions
- Transaction enables strategic merger of Berry’s Health, Hygiene and Specialties business with Glatfelter
- Notes offering provides funding for cash distribution and debt repayment
Negative
- Additional $800 million debt burden for the new entity Magnera
- 7.250% interest rate may increase financial costs for Magnera
- Complex transaction structure with potential integration challenges
Insights
The upsized $800 million senior secured notes offering by Berry’s subsidiary is a significant development in the proposed merger between Berry’s Health, Hygiene and Specialties Global Nonwovens and Films business and Glatfelter. This debt issuance, bearing a 7.250% interest rate, will play a important role in financing the transaction and restructuring existing debt.
Key points to consider:
- The offering size increased by $300 million from the initial $500 million, indicating strong investor demand and confidence in the deal.
- The notes will mature in 2031, providing long-term financing stability for the newly formed Magnera
- Proceeds will fund a cash distribution to Berry Global, Inc., repay Glatfelter’s existing debt and cover transaction fees.
- The complex security structure, involving first and second-priority liens on various assets, reflects a strategic approach to balancing the new entity’s debt obligations.
This transaction demonstrates financial sophistication and market confidence in the merger’s potential. However, investors should monitor how effectively Magnera manages this substantial debt load post-merger.
The structured nature of this notes offering reveals several important legal considerations:
- Escrow Arrangement: The proceeds are held in escrow until transaction closing, providing security for noteholders and demonstrating careful risk management.
- Reverse Morris Trust Structure: This tax-efficient method for corporate divestitures indicates strategic legal planning to optimize the transaction’s tax implications.
- Security and Subordination: The complex lien structure and pari passu ranking with certain existing debts show a balanced approach to creditor rights and priorities.
- Regulatory Compliance: The private offering under Rule 144A and Regulation S ensures compliance with securities laws while accessing institutional and international investors.
These legal structures and compliance measures reflect sophisticated transaction planning, potentially reducing legal risks and enhancing the deal’s overall stability. However, the complexity may also introduce challenges in execution and ongoing compliance that investors should be aware of.
Notes to be Assumed by Magnera at Closing of the Transaction
EVANSVILLE, Ind. and CHARLOTTE, N.C., Oct. 10, 2024 (GLOBE NEWSWIRE) — Berry Global Group, Inc. (NYSE:BERY) (“Berry”) and Glatfelter Corporation (NYSE:GLT) (“Glatfelter”) announced today that Treasure Escrow Corporation (the “Issuer”), currently an indirect, wholly owned subsidiary of Berry, priced and upsized its previously announced offering to $800 million aggregate principle amount of its senior secured notes due 2031 (the “Notes”).
The Notes are being offered by the Issuer in connection with the previously announced merger of Berry’s Health, Hygiene and Specialties Global Nonwovens and Films business with Glatfelter, in a Reverse Morris Trust transaction (the “Transaction”). In connection with the closing of the Transaction, the combined company will be renamed Magnera Corporation (“Magnera”), and the obligations of the Issuer under the Notes will be ultimately assumed by Magnera (the “Magnera Assumption”). The Notes are not and will not be obligations of Berry or its wholly owned subsidiary Berry Global, Inc. (“BGI”).
The size of the offering reflects an increase of $300 million in aggregate principal amount of the Notes from the previously announced offering size of $500 million. The Notes will be issued in lieu of the same amount of debt previously intended to be provided under the new term loan facility to be entered into by Treasure Holdco, Inc. (“Spinco”) and to be assumed by Magnera in conjunction with and assuming the closing of the Transaction.
The Notes will bear interest at a rate of 7.250% payable semiannually, in cash in arrears, on April 15 and October 15 of each year, commencing on April 15, 2025, and will mature on November 15, 2031.The closing of the offering is expected to be completed on or about October 25, 2024, subject to customary closing conditions.
The proceeds from the offering, together with the proceeds of a term loan financing in connection with the Transaction, will be used to fund the cash distribution to BGI in connection with the Transaction, to repay certain existing indebtedness of Glatfelter, and to pay certain fees and expenses. All proceeds of the offering will be deposited into a segregated escrow account, together with any additional amounts necessary to redeem the Notes, until certain escrow release conditions are satisfied substantially concurrently with the consummation of the Transaction. Amounts held in the escrow account will be pledged for the benefit of the holders of the Notes, pending the release of such funds in connection with the consummation of the Transaction.
Prior to the date of the Magnera Assumption, the Notes will be the sole obligation of the Issuer, not Berry or any of its subsidiaries other than the Issuer. Following the Magnera Assumption, the Notes and the guarantees thereof will be unsubordinated obligations of Magnera, and each of Magnera’s existing and future wholly owned restricted domestic subsidiaries, subject to certain specified exceptions (the “Subsidiary Guarantors”), will be equal in right of payment to all existing and future unsubordinated indebtedness of Magnera and the Subsidiary Guarantors and structurally subordinated to all the liabilities of Magnera’s subsidiaries that are not or do not become Subsidiary Guarantors. Following the Magnera Assumption, the Notes and the guarantees thereof will be secured by: (i) a second-priority lien on accounts receivable, inventory, and certain related assets of Magnera and the Subsidiary Guarantors that will secure Magnera’s new revolving credit facility on a first-priority basis and Magnera’s new term loan facility on a second-priority basis, both anticipated to be established at the closing of the Transaction, and (ii) a first-priority lien on other assets securing Magnera’s term loan facility on a first-priority basis and Magnera’s revolving credit facility on a second-priority basis, in each case, subject to certain specified exceptions and permitted liens. The Notes will rank pari passu in right of payment, and will be secured on an equal and ratable basis, with Magnera’s new term loan facility and Glatfelter’s existing 4.750% senior notes due 2029, which are expected to remain outstanding following the closing of the Transaction. Additionally, the Notes will be effectively senior to all of Magnera’s and the Subsidiary Guarantors’ existing and future indebtedness that is not secured by a lien on the collateral to the extent of the value of the assets securing the Notes.
The Notes are being offered in a private offering exempt from registration only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States, only to non-U.S. investors pursuant to Regulation S. The Notes have not been and will not be registered under the Securities Act or any state or other securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities laws.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offering, solicitation, or sale would be unlawful. Any offers of the Notes will be made only by means of a private offering memorandum.
About Berry
At Berry Global Group, Inc. (NYSE: BERY), we create innovative packaging solutions that we believe make life better for people and the planet. We do this every day by leveraging our unmatched global capabilities, sustainability leadership, and deep innovation expertise to serve customers of all sizes around the world. Harnessing the strength in our diversity and industry-leading talent of over 40,000 global employees across more than 250 locations, we partner with customers to develop, design, and manufacture innovative products with an eye toward the circular economy. The challenges we solve and the innovations we pioneer benefit our customers at every stage of their journey.
About Glatfelter
Glatfelter is a leading global supplier of engineered materials with a strong focus on innovation and sustainability. Glatfelter’s high-quality, technology-driven, innovative, and customizable nonwovens solutions can be found in products that are Enhancing Everyday Life®. These include personal care and hygiene products, food and beverage filtration, critical cleaning products, medical and personal protection, packaging products, as well as home improvement and industrial applications. Headquartered in Charlotte, NC, Glatfelter’s 2023 revenue was $1.4 billion with approximately 2,980 employees worldwide. Glatfelter’s operations utilize a variety of manufacturing technologies including airlaid, wetlaid and spunlace with fifteen manufacturing sites located in the United States, Canada, Germany, France, Spain, the United Kingdom, and the Philippines. Glatfelter has sales offices in all major geographies serving customers under the Glatfelter and Sontara® brands.
Cautionary Statement Concerning Forward-Looking Statements
Statements in this release that are not historical, including statements relating to the expected timing, completion and effects of the proposed Transaction, and about the offering and issuance of the Notes by the Issuer, are considered “forward-looking” within the meaning of the federal securities laws and are presented pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “would,” “could,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” “outlook,” “anticipates” or “looking forward,” or similar expressions that relate to strategy, plans, intentions, or expectations. All statements relating to estimates and statements about the expected timing and structure of the proposed Transaction, including the offering and issuance of the Notes, the ability of the parties to complete the proposed Transaction, benefits of the Transaction, including future financial and operating results, executive and Board transition considerations, the combined company’s plans, objectives, expectations and intentions, and other statements that are not historical facts are forward-looking statements. In addition, senior management of Berry and Glatfelter, from time to time may make forward-looking public statements concerning expected future operations and performance and other developments.
Actual results may differ materially from those that are expected due to a variety of factors, including without limitation: the occurrence of any event, change or other circumstances that could give rise to the termination of the proposed Transaction; the risk that the Glatfelter shareholders may not approve the Transaction proposals; the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated or may be delayed; risks that any of the other closing conditions to the proposed Transaction may not be satisfied in a timely manner; risks that the anticipated tax treatment of the proposed Transaction is not obtained; risks related to potential litigation brought in connection with the proposed Transaction; uncertainties as to the timing of the consummation of the proposed transactions; unexpected costs, charges or expenses resulting from the proposed transactions; risks and costs related to the implementation of the separation of the business, operations and activities that constitute the global nonwovens and hygiene films business of Berry into Spinco, including timing anticipated to complete the separation; any changes to the configuration of the businesses included in the separation if implemented; the risk that the integration of the combined company is more difficult, time consuming or costly than expected; risks related to financial community and rating agency perceptions of each of Berry and Glatfelter and its business, operations, financial condition and the industry in which they operate; risks related to disruption of management time from ongoing business operations due to the proposed Transaction; failure to realize the benefits expected from the proposed Transaction; the risk that the offering and issuance of the Notes may not be effected on terms that are advantageous to the Issuer, Spinco or, after the closing of the Transaction, Magnera, or at all; effects of the announcement, pendency or completion of the proposed Transaction on the ability of the parties to retain customers and retain and hire key personnel and maintain relationships with their counterparties, and on their operating results and businesses generally; and other risk factors detailed from time to time in Glatfelter’s and Berry’s reports filed with the Securities and Exchange Commission (“SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC. These risks, as well as other risks associated with the proposed Transaction, are more fully discussed in the proxy statement/prospectus and the registration statements filed with the SEC in connection with the proposed Transaction. The foregoing list of important factors may not contain all of the material factors that are important to you. New factors may emerge from time to time, and it is not possible to either predict new factors or assess the potential effect of any such new factors. Accordingly, readers should not place undue reliance on those statements. All forward-looking statements are based upon information available as of the date hereof. All forward-looking statements are made only as of the date hereof and neither Berry, Glatfelter, the Issuer, Spinco nor Magnera undertake any obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the proposed Transaction between Berry and Glatfelter. In connection with the proposed Transaction, Glatfelter filed a registration statement on Form S-4 containing a proxy statement/prospectus with the SEC which was declared effective on September 17, 2024. Glatfelter has also filed a proxy statement/prospectus which was sent to Glatfelter’s shareholders on or about September 20, 2024. In addition, Spinco filed a registration statement on Form 10 in connection with its separation from Berry. The Form 10 has not yet been declared effective. This communication is not a substitute for the registration statements, proxy statement/prospectus or any other document which Berry and/or Glatfelter may file with the SEC. STOCKHOLDERS OF BERRY AND GLATFELTER ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE REGISTRATION STATEMENTS AND PROXY STATEMENT/PROSPECTUS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain copies of the registration statements and proxy statement/prospectus as well as other filings containing information about Berry and Glatfelter, as well as Spinco, without charge, at the SEC’s website, www.sec.gov. Copies of documents filed with the SEC by Berry or Spinco will be made available free of charge on Berry’s investor relations website at ir.berryglobal.com. Copies of documents filed with the SEC by Glatfelter will be made available free of charge on Glatfelter’s investor relations website at www.glatfelter.com/investors.
No Offer or Solicitation
This communication is for informational purposes only and is not intended to and does not constitute an offer to sell, or the solicitation of an offer to sell, subscribe for or buy, or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, sale or solicitation would be unlawful, prior to registration or qualification under the securities laws of any such jurisdiction. No offer or sale of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, as amended, and otherwise in accordance with applicable law.
Participants in Solicitation
Berry and its directors and executive officers, and Glatfelter and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of Glatfelter common stock and/or the offering of securities in respect of the proposed Transaction. Information about the directors and executive officers of Berry, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth under the caption “Security Ownership of Beneficial Owners and Management” in the definitive proxy statement for Berry’s 2024 Annual Meeting of Stockholders, which was filed with the SEC on January 4, 2024 (www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001378992/000110465924001073/tm2325571d6_def14a.htm). Information about the directors and executive officers of Glatfelter including a description of their direct or indirect interests, by security holdings or otherwise, is set forth under the caption “Security Ownership of Certain Beneficial Owners and Management” in the proxy statement for Glatfelter’s 2024 Annual Meeting of Shareholders, which was filed with the SEC on March 26, 2024 (www.sec.gov/ix?doc=/Archives/edgar/data/0000041719/000004171924000013/glt-20240322.htm). Additional information regarding the interests of these participants can also be found in the Form S-4 and the proxy statement/prospectus filed by Glatfelter with the SEC and the registration statement on Form 10 filed by Spinco with the SEC.
Berry Global, Inc.
Investor Contact
Dustin Stilwell
VP, Investor Relations
+1 812.306.2964
ir@berryglobal.com
Glatfelter Corporation
Investor Contact
Ramesh Shettigar
+1 717.225.2746
Ramesh.Shettigar@glatfelter.com
FAQ
What is the size and interest rate of the senior secured notes offering by Berry’s subsidiary for the GLT merger?
The offering is for $800 million in senior secured notes due 2031, with an interest rate of 7.250% payable semiannually.
When is the closing date for the notes offering related to the Berry-GLT merger?
The closing of the offering is expected to be completed on or about October 25, 2024, subject to customary closing conditions.
What will the combined company of Berry’s Health, Hygiene and Specialties business and GLT be called?
The combined company resulting from the merger will be renamed Magnera
How will the proceeds from the notes offering be used in the Berry-GLT merger?
The proceeds will be used to fund a cash distribution to Berry Global, Inc., repay certain existing indebtedness of Glatfelter, and pay transaction-related fees and expenses.
