B&G Foods completed an amendment to its senior secured credit facility to temporarily increase the maximum consolidated leverage ratio permitted under the facility. According to an 8K filed with the SEC, Barclays Bank is the administrative and collateral agent for the facility.
B&G Foods’ maximum consolidated leverage ratio (defined as the ratio determined on a pro forma basis of consolidated net debt as of the last day of any period of four consecutive fiscal quarters to adjusted EBITDA, as defined in the credit agreement, before share-based compensation for such period), will increase from 7.00 to 1.00 to 7.5 to 1.00 for the quarter ending July 2 and then to 8.00 to 1.00 for the quarter ending Oct. 1 through the quarter ending Sept. 30, 2023. The maximum consolidated leverage ratio will decrease to 7.5 to 1.00 for the quarter ending Dec. 30, 2023, before returning to 7.00 to 1.00 for the quarters ending March 30, 2024, and thereafter.
B&G Foods also sold 2,739,568 shares of common stock under its previously announced “at‑the-market” (ATM) equity offering program during Q2/22. B&G Foods generated $63.2 million in gross proceeds, or $23.08 per share, from the sale, paid commissions to the sales agents of approximately $1.3 million and incurred other fees and expenses of approximately $0.1 million. In total, since launching the ATM equity offering program during Q3/21, B&G Foods has sold 6,547,627 shares of common stock and has generated $179 million in gross proceeds, or $27.34 per share, from the sales and paid commissions to the sales agents of approximately $3.6 million and incurred other fees and expenses of approximately $0.6 million.
B&G Foods used the net proceeds from shares sold under the ATM equity offering program to repay revolving credit loans, to pay offering fees and expenses and for general corporate purposes. B&G Foods intends to use the net proceeds from any future sales of its common stock under the ATM offering for general corporate purposes, which could include, among other things, repayment, refinancing, redemption or repurchase of long-term debt or possible acquisitions.
“We believe that temporarily increasing our maximum consolidated leverage ratio and selling shares under our ATM equity offering program are prudent steps given the current inflationary environment and our typical inventory build and working capital needs during the second and third quarters,” Bruce C. Wacha, executive vice president of finance and CFO of B&G Foods, said. “We have taken and are continuing to take pricing actions and cost reduction efforts to offset inflation; however, pricing actions and cost reduction efforts typically lag input cost inflation. The credit agreement amendment and the sale of shares through the ATM program provide increased flexibility for working capital needs and possible acquisitions until pricing actions and cost reduction efforts are realized.”