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Conagra Brands, Inc. (NYSE:CAG), a consumer packaged goods company with a market capitalization of $9.77 billion, announced Monday that it has entered into a new $2 billion unsecured revolving credit agreement with Bank of America, N.A. and other lenders. According to InvestingPro data, the company currently maintains total debt of $8.1 billion. The Third Amended and Restated Revolving Credit Agreement was finalized on Friday and replaces the company’s previous revolving credit facility.
The new credit facility matures on June 27, 2030, with options to extend the term by one or two years on an annual basis. The facility is unsecured and provides Conagra with access to a maximum aggregate principal amount of $2 billion outstanding at any one time.
According to the company’s press release statement, the agreement allows Conagra to borrow at interest rates based on either the Term SOFR plus a spread ranging from 0.805% to 1.30% per annum, or a base rate (defined as the highest of Bank of America’s prime rate, the federal funds rate plus 0.50%, or one-month Term SOFR plus 1.00%) plus a spread between 0.0% and 0.30% per annum. The applicable spread is determined by Conagra’s senior unsecured long-term debt ratings.
The company is also required to pay a facility fee quarterly, with rates ranging from 0.07% to 0.20% per annum, depending on its debt ratings, as well as customary administrative and letter of credit fees.
The agreement includes standard affirmative and negative covenants for unsecured investment grade credit facilities, along with financial covenants tied to maximum net leverage and minimum interest coverage ratios. It also outlines typical events of default, which could result in lenders suspending or terminating their commitments and accelerating payment obligations.
No borrowings were outstanding under the prior revolving credit agreement as of the closing date.
This information is based on a press release statement filed with the Securities and Exchange Commission.
In other recent news, Conagra Brands reported more than $12 billion in net sales for fiscal 2024. The company has completed the sale of its Van de Kamp’s and Mrs. Paul’s frozen seafood brands to High Liner Foods, although the financial terms were not disclosed. Conagra also announced plans to remove artificial colors from its U.S. frozen product portfolio by the end of 2025, as part of a broader strategy to align with consumer preferences. In terms of analyst activity, TD Cowen lowered its price target for Conagra to $20.50 from $22, maintaining a Hold rating, citing economic pressures and supply chain disruptions. UBS initiated coverage with a neutral rating and a $22 price target, highlighting a balanced risk-reward outlook despite organic growth challenges. Additionally, Conagra board member Fran Horowitz will step down at the 2025 Annual Meeting of Shareholders. These developments reflect ongoing changes and challenges for the company as it navigates market dynamics and consumer trends.
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