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Food Firm Conagra Brands Gains Additional Liquidity

May 21, 2020

American food manufacturer Conagra Brands Inc. announced Wednesday that it is continuing to make progress against its deleveraging efforts and steps to further enhance its balance sheet strength and financial flexibility. Conagra will pre-pay, effective May 29, the remaining $275 million outstanding under its senior floating rate notes due Oct. 22, 2020. Conagra has also obtained a $600 million senior three-year unsecured term loan which can be drawn, in full or in part, through October 2020 with opening pricing of LIBOR plus 150 basis points. 

While Conagra has not yet drawn on the facility, this facility provides Conagra with the liquidity to repay, along with cash on hand, the Company's debt maturities in fiscal 2021. Farm Credit Services of America and Farm Credit Bank of Texas served as Co-Lead Arrangers for the financing with Farm Credit Services of America serving as the Administrative Agent.

Dave Marberger, executive vice president and chief financial officer of Conagra Brands, commented, "Conagra continues to deliver strong financial performance and cash flow as we support our employees, retail partners and consumers in the current environment. These strategic steps will enable us to further strengthen our balance sheet, maintain liquidity and enhance our financial flexibility. These actions build upon the significant progress we have made towards our deleveraging targets in recent quarters and position us to refinance our fiscal 2021 debt maturities at attractive rates with pre-payable debt."

In connection with its capital allocation priorities, Conagra said it is committed to deleveraging and maintaining its dividend and solid investment-grade credit rating. Pro forma for the repayment of the $275 million in senior floating rate notes, Conagra will have reduced total gross debt by over $1.8 billion since the closing of the Pinnacle acquisition in October 2018. The company remains confident it will achieve its fiscal year 2021 net debt to trailing 12 months adjusted EBITDA leverage ratio target of 3.6 to 3.5.

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