B&G Foods, Inc. (NYSE: BGS, BGF), a manufacturer and
distributor of high quality, shelf-stable foods, announced today
that it has issued a notice of redemption for $90,000,002.95
principal amount of its outstanding 12% senior subordinated notes
due 2016 at a cash redemption price of 106% of the principal amount
of the notes being redeemed, plus accrued and unpaid interest on
such amount, to, but excluding, November 2, 2009. Upon completion
of the redemption on November 2, 2009, $69,540,885.70 principal
amount of the senior subordinated notes will remain
outstanding.
The senior subordinated notes redeemed will include senior
subordinated notes represented by the Company’s Enhanced Income
Securities (EISs) and senior subordinated notes held separately.
Each EIS represents one share of the Company’s Class A common stock
and $7.15 principal amount of the senior subordinated notes. The
senior subordinated notes will be redeemed on a pro rata basis in
accordance with the terms of the indenture governing the senior
subordinated notes and will be redeemed in principal amounts of
$7.15 or integral multiples thereof.
Pursuant to the terms of the indenture, the partial redemption
of the senior subordinated notes by B&G Foods will result in an
automatic separation (or “splitting”) of all of the EISs on the
redemption date. As a result, the EISs, which currently trade on
the New York Stock Exchange under the symbol “BGF,” will cease
trading before the opening of the market on November 2, 2009. When
the market opens on November 2, 2009, those shares of Class A
common stock that had previously been represented by EISs, will
trade on the New York Stock Exchange under the symbol “BGS”
together with all other outstanding shares of the Company’s Class A
common stock. The remaining senior subordinated notes that are not
redeemed, whether previously represented by EISs or held
separately, will not be listed on an exchange and B&G Foods
does not intend to create or sustain a market for such notes
following the redemption date. Thus, the extent of any market for
the remaining senior subordinated notes will depend upon, among
other things, the principal amount of the senior subordinated notes
that remain outstanding after the redemption date, the number of
holders remaining at such time and the interest in maintaining a
market in the senior subordinated notes on the part of securities
firms. Holders may need to hold their senior subordinated notes
until maturity or an earlier redemption, if any, by the
Company.
The automatic separation of the EISs and the partial redemption
of the senior subordinated notes will not result in any change in
the payments that holders of the component senior subordinated
notes and shares of Class A common stock should expect to receive,
except that after the redemption date holders will no longer
receive interest payments on those senior subordinated notes that
have been redeemed.
A holder of senior subordinated notes that are not redeemed will
continue to be entitled to receive quarterly interest payments at
an annual rate of 12% of the aggregate principal amount of the
senior subordinated notes held by such holder, or $0.2145 per
senior subordinated note (equal to $0.858 per senior subordinated
note per year). Likewise, holders of the Class A common stock will
continue to receive quarterly dividend payments if and to the
extent dividends are declared by the board of directors. B&G
Foods has declared and paid quarterly dividends on the Class A
common stock each quarter since the 2004 initial public offering of
EISs. The current intended dividend rate on the Class A common
stock is $0.17 per share (equal to $0.68 per share annually).
Dividend payments, however, are not mandatory or guaranteed and
holders of the Class A common stock do not have any legal right to
receive, or require B&G Foods to pay, dividends. The board of
directors may at any time decrease the level of dividends or
entirely discontinue the payment of dividends.
“We believe that using the net proceeds of our recently
completed public offering of Class A common stock, supplemented by
cash on hand, to accomplish the partial redemption of the 12%
senior subordinated notes is the most effective use of those
funds,” stated David L. Wenner, President and Chief Executive
Officer of B&G Foods. “On a pro forma basis, our fiscal
2009 free cash flow after dividends, interest, taxes and capital
expenditures is expected to improve slightly as a result of the
equity offering and partial redemption, with after-tax interest
savings from the partial redemption offsetting dividend payments on
the additional shares of Class A common stock. Due to the after-tax
interest savings from the partial redemption, our projected fiscal
2009 earnings per share are expected to be diluted only slightly
despite the substantial increase in shares of Class A common stock
outstanding.”
“The EIS has been a remarkable investment vehicle, returning
approximately $8.37 in dividend and interest payments to an
investor who bought an EIS at the $15.00 initial public offering
price in October 2004 and who holds it through October 30, 2009.
That return is a testimony to the strength and stability of B&G
Foods’ portfolio of brands and the strong cash flow that it
generates. We look forward to continuing to provide our investors
with a high-yield dividend on our shares of Class A common stock,
all of which following the partial redemption of the senior
subordinated notes will trade under the symbol, “BGS.”
The partial redemption of the senior subordinated notes is
expected to result in a pre-tax charge in the Company’s fourth
quarter of fiscal 2009 of $9.5 million, which represents a cash
charge of $5.4 million relating to the call premium and a non-cash
charge of $4.1 million relating to the write-off of unamortized
debt issuance costs associated with the redeemed notes. During the
third quarter of fiscal 2009, the Company repurchased $6.3 million
principal amount of senior subordinated notes, which is expected to
result in a pre-tax charge in the Company’s third quarter of $0.7
million, representing a cash charge of $0.4 million relating to the
repurchase premium and a non-cash charge of $0.3 million relating
to the write-off of unamortized debt issuance costs associated with
the repurchased notes.
Interest on the redeemed portion of the senior subordinated
notes will cease to accrue on and after November 2, 2009. The only
remaining right of the holders thereof shall be to receive payment
of the redemption price (together with the accrued and unpaid
interest on such amount).
A Notice of Partial Redemption is being mailed by The Bank of
New York Mellon, the trustee for the notes, to the registered
holder of the notes. Copies of the Notice of Partial Redemption and
additional information relating to the procedure for redemption may
be obtained from The Bank of New York Mellon at 1.800.254.2826.
Additional information concerning the partial redemption and the
automatic splitting of the EISs will be posted to the Investor
Relations section of B&G Foods’ website, www.bgfoods.com, under
the heading “Investor FAQ.”
About B&G Foods, Inc.
B&G Foods and its subsidiaries manufacture, sell and
distribute a diversified portfolio of high-quality, shelf-stable
foods across the United States, Canada and Puerto Rico. B&G
Foods’ products include hot cereals, fruit spreads, canned
meats and beans, spices, seasonings, marinades, hot sauces, wine
vinegar, maple syrup, molasses, salad dressings, Mexican-style
sauces, taco shells and kits, salsas, pickles, peppers and other
specialty food products. B&G Foods competes in the retail
grocery, food service, specialty, private label, club and mass
merchandiser channels of distribution. Based in Parsippany, New
Jersey, B&G Foods’ products are marketed under many recognized
brands, including Ac’cent, B&G, B&M, Brer Rabbit, Cream of
Rice, Cream of Wheat, Emeril’s, Grandma’s Molasses, Joan of Arc,
Las Palmas, Maple Grove Farms of Vermont, Ortega, Polaner, Red
Devil, Regina, Sa-són, Trappey’s, Underwood, Vermont Maid and
Wright’s.
Forward-Looking Statements
Statements in this press release that are not statements of
historical or current fact constitute “forward-looking statements.”
Such forward-looking statements involve known and unknown risks,
uncertainties and other unknown factors that could cause the actual
results of B&G Foods to be materially different from the
historical results or from any future results expressed or implied
by such forward-looking statements. In addition to statements that
explicitly describe such risks and uncertainties readers are urged
to consider statements labeled with the terms “believes,” “belief,”
“expects,” “intends,” “anticipates” or “plans” to be uncertain and
forward-looking. The forward-looking statements contained herein
are also subject generally to other risks and uncertainties that
are described from time to time in B&G Foods’ filings with the
Securities and Exchange Commission, including under Item 1A, “Risk
Factors” in the Company’s Annual Report on Form 10-K for fiscal
2008 filed on March 5, 2009. B&G Foods undertakes no obligation
to publicly update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise.
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