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Berry anticipates $468 million from IPO

By: Michael Lauzon

September 19, 2012

EVANSVILLE, IND. (Updated Sept. 20, 3:15 p.m. ET) — Packaging giant Berry Plastics Group Inc. expects to raise about $468 million in its initial public offering, the company said in a Sept. 19 filing with the Securities and Exchange Commission. The amount represents the midpoint of the estimated range of $16-$18 for the initial share price. Berry will sell 29.4 million shares, although underwriters have an option to buy extra shares.

Berry expects its shares to begin trading Oct. 4 on the New York Stock Exchange under the symbol BERY. Berry is currently owned by investment funds associated with Apollo Group Management LLC and Graham Partners Inc. Apollo will retain a majority interest in Evansville-based Berry after the offering. Minority shareholders will be management, Graham Partners and co-investors.

Berry reported pro forma sales of $4.8 billion for the year ended June 30. It had a net loss of $212 million in that period. Its largest business segment is rigid packaging, followed by engineered materials and flexible packaging. It claims to have outperformed rivals in the past 11½ years, when its sales grew 24 percent per year, compounded.

The company said it will use most of its IPO proceeds to redeem $455 million in senior subordinated notes due Sept. 15, 2016. It will use the rest of the proceeds for working capital and general corporate purposes. As of June 30, Berry’s debt stood at $4.6 billion.

Berry first announced its IPO plans in March.

If the IPO achieves an $18-per-share price, the company’s total value, including stock held by Apollo and minority shareholders, would be about $2 billion. The firm said it does not plan to pay dividends on stock after the IPO.

Following the release of Berry’s prospectus, Standard & Poor’s Ratings Services placed all its ratings on Berry, including the B- corporate credit rating, on CreditWatch with positive implications. The agency explained Berry’s plan to retire some debt with its IPO is a positive step.

“If the transaction successfully closes, we expect leverage to improve to about 6.3x pro forma for June 30 2012,” stated Standard & Poor’s credit analyst Henry Fukuchi in a Sept. 20 news release.

Berry runs 68 U.S. manufacturing locations and 82 globally. It employs more than 15,000.

Lead underwriters for the IPO are BofA Merrill Lynch, Citigroup, Barclays and Deutsche Bank

Securities.