Business Context and Reporting Period
This Form 8-K, filed on June 11, 2019, by Amcor Plc (Amcor), reports the completion of exchange offers and consent solicitations for various senior notes issued by Amcor Finance (USA), Inc. (AFUI) and Bemis Company Inc. (Bemis). The filing also details the entry into material definitive agreements to integrate Bemis into Amcor's credit facilities following their business combination. The exchange offers expired on June 11, 2019.
Key Financial Metrics and Debt Restructuring
The filing focuses on debt restructuring rather than operating performance metrics such as revenue or cash flow. The primary financial activity involves the exchange of existing senior notes for new senior guaranteed notes and cash.
| Note Series (Issuer) | Principal Tendered (USD) | Principal Remaining (USD) |
|---|---|---|
| 6.800% Senior Notes due 2019 (Bemis) | $288,685,000 | $111,317,000 |
| 4.500% Senior Notes due 2021 (Bemis) | $346,716,000 | $53,284,000 |
| 3.100% Senior Notes due 2026 (Bemis) | $293,206,000 | $6,794,000 |
| 3.625% Guaranteed Senior Notes due 2026 (AFUI) | $591,294,000 | $8,706,000 |
| 4.500% Guaranteed Senior Notes due 2028 (AFUI) | $497,510,000 | $2,490,000 |
New notes were issued to replace the tendered amounts, with aggregate principal amounts of up to $1.1 billion available for issuance. The filing does not provide specific revenue, profit, or liquidity figures for the period.
Material Changes Versus Prior Period
The most significant material change is the substantial reduction in the outstanding principal of specific legacy debt series following the exchange offers. For example, the Bemis 3.100% 2026 Notes were reduced from $300 million to approximately $6.8 million, and the AFUI 4.500% 2028 Notes were reduced from $500 million to approximately $2.5 million. Additionally, Amcor and Bemis were formally added as borrowers and guarantors to multiple credit facilities (Three-Year, Four-Year, Five-Year, 364-Day, and Term Loan Agreements) to reflect the completed business combination.
Guidance, Outlook, and Material Agreements
Registration Rights and Exchange Obligations: Amcor and Bemis entered into Registration Rights Agreements requiring them to file a registration statement within 270 days of June 13, 2019, to offer holders of the new notes an exchange for registered notes. Failure to comply may result in increased interest rates on the new notes.
Credit Facility Integration: The company executed joinder agreements and guaranty supplements to integrate Bemis into Amcor's existing credit facilities. These facilities include:
- Three-Year Revolving Credit Facility: Up to $750 million.
- Four-Year Revolving Credit Facility: Up to $1.5 billion.
- Five-Year Revolving Credit Facility: Up to $1.5 billion.
- 364-Day Revolving Credit Facility: Up to $1.05 billion.
- Term Loan Facility: Up to $750 million.
Covenants and Risks: The credit agreements contain standard negative covenants limiting liens, asset sales, and additional subsidiary debt. Events of default include nonpayment, cross-defaults, insolvency, and change of control. The filing notes that the Supplemental Indentures eliminate certain covenants and restrictive provisions from the original indentures.
Key Facts for Investor Verification
- Debt Reduction Success: Verify the final settlement of the exchange offers and the exact cash consideration paid to noteholders who did not exchange for new notes.
- Interest Rate Penalties: Monitor compliance with the Registration Rights Agreements to ensure the interest rate on the new notes does not increase due to missed filing deadlines.
- Credit Facility Capacity: Confirm the current utilization levels of the newly integrated revolving credit facilities (totaling up to $4.8 billion in revolving capacity plus term loans).
- Covenant Compliance: Review the specific covenants removed via the Supplemental Indentures to understand the new flexibility regarding asset sales and indebtedness.
- Guarantee Structure: Note that the new notes are guaranteed on a joint and several basis by Amcor plc, Amcor Limited, Bemis, and Amcor UK Finance PLC.