Crown Holdings (NYSE:CCK), Inc., a leading manufacturer of packaging products for consumer goods, has announced through a subsidiary the completion of a note offering aimed at refinancing existing debt. Crown European Holdings S.A., a wholly-owned subsidiary of Crown Holdings, has issued €600 million in senior unsecured notes with a 4.5% interest rate, maturing on January 15, 2030.
The notes, which will pay interest semi-annually, were sold in a private placement to qualified institutional buyers and to non-U.S. persons. They have not been registered under the U.S. Securities Act and are subject to restrictions on resale. The proceeds from the sale, along with cash on hand, will be used to repay the subsidiary's 2.625% senior notes due in September 2024 and cover related fees and expenses.
The notes are guaranteed by Crown Holdings and certain of its subsidiaries in various jurisdictions, including the U.S., Canada, and several European countries. The indenture includes covenants limiting the company's ability to create liens, engage in sale and leaseback transactions, or merge with other companies, among other restrictions.
In addition, Crown Holdings announced a stock repurchase program of up to $2 billion by the end of 2027. The company's second-quarter performance exceeded expectations, with earnings per share rising from $1.31 to $1.45 and net sales reaching $3 billion, driven by a 6% increase in global beverage can volumes.
Analyst firms, including RBC Capital Markets, Truist Securities, Loop Capital, and Citi, have adjusted their price targets for Crown Holdings based on this performance and updated guidance. RBC Capital anticipates that Crown Holdings will generate significant free cash flow, over $750 million, in fiscal year 2024.
This is expected to support the company's debt reduction and share repurchase initiatives. Crown Holdings has also raised its full-year EPS guidance to a range of $6.00 to $6.25, suggesting a year-over-year growth of approximately 4.6%.
InvestingPro Insights
As Crown Holdings, Inc. strategically maneuvers its debt obligations with the recent note offering, investors may find the latest InvestingPro data insightful. The company's market capitalization stands at a robust $10.21 billion, indicating a significant presence in the packaging industry. With a Price to Earnings (P/E) ratio of 23.71, Crown Holdings is trading at a level that suggests investor confidence in its earnings potential. Moreover, a noteworthy InvestingPro Tip highlights that Crown Holdings has raised its dividend for three consecutive years, reflecting a commitment to shareholder returns amidst its financial strategies.
Additionally, the company's strong return over the last month, with a price total return of 19.81%, signals positive market sentiment. Analysts have also revised their earnings upwards for the upcoming period, which, paired with the prediction of profitability this year, could pique the interest of potential investors. For those seeking more comprehensive analysis and tips, InvestingPro offers an array of insights, including 7 more InvestingPro Tips for Crown Holdings, accessible at their dedicated page.
Investors and analysts alike may also consider the company's recent performance in terms of free cash flow yield, as suggested by another InvestingPro Tip, which implies that Crown Holdings may be undervalued based on its strong cash generation capabilities relative to its share price. These aspects of Crown Holdings' financial health could be crucial for stakeholders making informed decisions in light of the company's latest debt refinancing activities.
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