Performance Food Group Co (NYSE:PFGC) has entered into an Amended Credit Agreement, boosting its revolving commitments from $4.0 billion to $5.0 billion and extending the maturity date to September 9, 2029.
The agreement, made with Wells Fargo (NYSE:WFC) Bank and other lenders, also allows for up to $1.0 billion in incremental facilities. Interest on borrowings will be at either a Base Rate plus a spread or Term SOFR plus a spread, with an unused commitment fee of 0.250% per annum.
The company, on Monday, issued $1.0 billion of 6.125% Senior Notes due 2032, with interest payable semi-annually. The proceeds, along with borrowings under the Amended Credit Agreement, are intended to finance the acquisition of Cheney Bros, Inc., with any temporary surplus used for general corporate purposes.
The notes, guaranteed by PFGC's subsidiaries, offer holders the right to require repurchase upon certain triggering events. PFG Inc. can redeem the notes, in whole or in part, before September 15, 2027, at a premium, and thereafter at decreasing rates, or with qualifying equity offering proceeds.
The Amended Credit Agreement includes covenants on maintaining a minimum fixed charge coverage ratio and restricts the company's ability to incur debt, pay dividends, create liens, make investments, and dispose of assets. The Senior Notes contain similar covenants and customary events of default.
In other recent news, Performance Food Group (PFG) has made significant strides in its financial performance and growth strategy. The company recently priced its offering of $1 billion in Senior Notes, with the proceeds intended to finance the acquisition of Cheney Bros, Inc. This move is part of PFG's recent developments, which also include a robust 18.4% year-over-year growth in adjusted EBITDA for the fourth quarter of fiscal year 2024.
PFG's expansion strategy is further evidenced by its acquisition of José Santiago, a broadline foodservice distributor in Puerto Rico. Analyst firms Piper Sandler and Truist Securities have responded positively to these developments, raising their price targets for PFG to $87.00 and $88 respectively.
For fiscal year 2025, PFG projects net sales to be between $60 billion and $61 billion, with adjusted EBITDA ranging from $1.6 billion to $1.7 billion. These figures underscore PFG's commitment to its growth strategy and financial performance.
InvestingPro Insights
In light of Performance Food Group Co's (NYSE:PFGC) recent financial maneuvers, particularly the Amended Credit Agreement and the issuance of Senior Notes, it's worth looking at the company through the lens of InvestingPro's real-time data and analytics. PFGC's market capitalization stands at $11.39 billion, reflecting its significant presence in the market. Despite facing weak gross profit margins of 12.03%, the company is still a prominent player in the Consumer Staples Distribution & Retail industry. This is underscored by its substantial revenue of over $54 billion in the last twelve months as of Q4 2024, which has grown by 2.49% in the same period.
InvestingPro Tips suggest that analysts have recently revised their earnings expectations downwards for the upcoming period, which could be a point of concern for potential investors. Additionally, PFGC is trading at a high P/E ratio of 25.93 relative to near-term earnings growth, indicating that its stock might be priced on the higher side compared to its earnings outlook. However, it's also trading at a low revenue valuation multiple, which could signal an undervalued stock in terms of sales. Notably, the company has been profitable over the last twelve months and is expected to remain profitable this year, providing a measure of reassurance despite the earnings revisions.
For those considering an investment in PFGC, it's important to note that the company does not pay a dividend, which could influence the decision of income-focused investors. For a more comprehensive analysis, there are additional InvestingPro Tips available, offering deeper insights into Performance Food Group's financial health and prospects. Interested readers can find these tips on the InvestingPro platform, which includes further metrics and analytics to guide investment decisions.
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