Packaging Corporation of America prices $500 million senior notes due 2035

Packaging Corporation of America (NYSE:PKG), a $17.56 billion market cap packaging solutions provider with annual revenues exceeding $8.6 billion, announced Monday that it has priced an offering of $500 million aggregate principal amount of 5.200% senior notes due 2035. The company expects to close the issuance and sale of the notes Friday. According to InvestingPro data, PKG maintains strong financial health with robust cash flows sufficient to cover interest payments.

According to a statement based on an SEC filing, net proceeds from the offering are expected to be approximately $495.1 million, after deducting underwriting discounts and estimated offering expenses. The company intends to use the proceeds, along with borrowings under its term loan facilities and cash on hand, to finance its planned acquisition of the containerboard business of Greif, Inc., as well as related fees and expenses. PKG’s strong liquidity position is evidenced by its healthy current ratio of 3.54, indicating ample ability to meet short-term obligations. For deeper insights into PKG’s financial health and growth potential, investors can access comprehensive analysis through InvestingPro’s detailed research reports.

The notes will be unsecured senior obligations of Packaging Corporation of America and will mature on August 15, 2035. Interest will be paid at a rate of 5.200% per year, with payments due semi-annually on February 15 and August 15, beginning February 15, 2026.

Prior to May 15, 2035, the company may redeem the notes at a price equal to the greater of 100% of the principal amount or a make-whole amount, plus accrued and unpaid interest. On or after May 15, 2035, the notes may be redeemed at 100% of the principal amount plus accrued and unpaid interest.

If the planned acquisition of Greif’s containerboard business is not completed by June 30, 2026, or if the acquisition agreement is terminated before that date, the company will be required to redeem all of the notes at a price equal to 101% of the principal amount, plus accrued and unpaid interest.

In the event of a change of control triggering event, holders of the notes will have the right to require the company to repurchase their notes at 101% of the principal amount plus accrued and unpaid interest.

The indenture governing the notes includes restrictions on the company’s ability to incur additional secured debt, enter into sale and leaseback transactions, and merge or sell substantially all of its assets.

This information is based on a press release statement and details disclosed in a recent SEC filing. PKG has demonstrated long-term financial stability, maintaining dividend payments for 23 consecutive years. InvestingPro subscribers can access additional insights, including 10 more exclusive ProTips and detailed financial metrics, to make more informed investment decisions.

In other recent news, Packaging Corporation of America has announced a $1.8 billion acquisition of Greif Inc.’s containerboard business. This acquisition includes two mills with 800,000 tons of capacity and eight sheet feeder and corrugated plants across the United States. Greif’s containerboard business reported approximately $1.2 billion in sales and $212 million in EBITDA for the 12 months ending April 30, 2025. The transaction is expected to close by the end of the third quarter, subject to regulatory approvals. Meanwhile, Citi has maintained its Neutral rating on Packaging Corp . of America with a price target of $197.00. Citi forecasts the company’s second-quarter EBITDA to rise by 11% year-over-year to $447 million, slightly above consensus estimates. The growth is anticipated to be driven by modest volume increases and high-single-digit percentage price improvements in the Packaging segment. In related sector news, Cascades Inc. plans to close its Niagara Falls facility by September 2025 as part of its optimization strategy, which may have a positive impact on the sector according to Citi.

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