Pinnacle Foods Finance, a subsidiary of Pinnacle Foods, completed pricing for the previously-announced refinancing of its senior secured credit facilities.
Bank of America Merrill Lynch is acting as lead arranger for the refinancing, with Barclays, Credit Suisse, Goldman Sachs and Morgan Stanley acting as additional arrangers.
Pinnacle priced the new $2.262 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 expects the favorable pricing, along with the anticipated $200 million term loan repayment, to result in interest expense for 2017 that is modestly above $130 million. As a result, Pinnacle increased its guidance for adjusted diluted EPS for 2017 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.
Total pro forma cash interest savings over the life of the new seven-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 intends to use the proceeds, along with $213 million of cash on hand, to repay its existing senior secured term loan debt totaling approximately $2.462 billion aggregate principal amount and transaction fees. The obligation of Pinnacle to repay its existing indebtedness is conditioned upon the consummation of this refinancing.
Pinnacle Executive Vice President and CFO Craig Steeneck said, “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.”
The refinancing is expected to close on or about February 3, 2017 and is subject to market and other customary conditions.