Reynolds Consumer Products secures term loan refinancing

LAKE FOREST, Ill. - Reynolds Consumer Products Inc . (NASDAQ:REYN), a $5 billion market cap consumer goods company known for household brands like Reynolds Wrap and Hefty, has successfully refinanced a $1.645 billion portion of its term loan facility, initially totaling $2.475 billion. This strategic financial move extends the loan’s maturity by approximately five years to 2032, enhancing the company’s financial agility. According to InvestingPro analysis, the company maintains strong liquidity with a current ratio of 2.04, indicating robust short-term financial health.

The new term loan, which matures in 2032, comes with a competitive interest rate tied to the Secured Overnight Financing Rate (SOFR) plus 175 basis points annually. This represents a slight reduction from the previous rate, indicating a 10 basis point credit spread decrease. The company attributes the favorable terms to its robust credit profile and its ability to generate strong free cash flow, coupled with disciplined capital management. The company’s financial strength is reflected in its $369 million in levered free cash flow over the last twelve months, supporting a healthy 3.73% dividend yield.

JP Morgan played a pivotal role as the lead-left arranger in the refinancing process. Nathan Lowe, the Chief Financial Officer of Reynolds Consumer Products, expressed satisfaction with the refinancing outcome, noting it as a testament to the company’s creditworthiness and financial prudence. Lowe also acknowledged JP Morgan’s exceptional support during the refinancing and the contribution of the revolving credit facility bank group.

The refinancing is part of the company’s broader strategy to bolster its financial foundation, enabling it to pursue strategic priorities and deliver long-term shareholder value. This comes after an upsizing of the company’s revolving credit facility in October, further solidifying its capital structure.

Reynolds Consumer Products enjoys a significant presence in American households, with its products being used for various purposes, including cooking, serving, cleanup, and storage. The company holds leading market share positions in the majority of the categories it operates in.

This news is based on a press release statement and reflects the company’s current financial strategy and outlook, which may be subject to change based on future events or new information.

In other recent news, Reynolds Consumer Products Inc. has announced its strategic update aimed at boosting sales growth through distribution gains and innovation. The company plans to selectively increase investments in high-return activities, which is expected to provide earnings flexibility over time. Reynolds has set long-term targets for compound annual growth rates of 2% in sales and 4% in adjusted EBITDA from 2024 to 2030. The company anticipates improved trends following the first quarter of 2025, with the benefits of its updated strategy becoming more evident in the latter half of the year.

Stifel analysts have adjusted their outlook for Reynolds, reducing the stock price target to $31 from $32 while maintaining a Hold rating. This revision comes in light of Reynolds’ guidance for 2025, projecting a low-single-digit decline in sales despite retail volume expectations. The fourth-quarter results for 2024 were solid, but the 2025 sales and adjusted EBITDA forecasts prompted the slight decrease in the price target. Analysts at Stifel based their new target on an 11x multiple of the estimated 2026 adjusted EBITDA, suggesting more potential for upside than downside at the current level.

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