ConAgra expects to treat bondholders ‘very well’ as it splits in two

By Lisa Kerner

Charlotte, N.C., Nov. 18 – ConAgra Foods, Inc. executives said they expect to treat bondholders “very well” under plans announced Wednesday to separate the company into two independent public companies by way of a tax-free spinoff.

Speaking during a conference call on Wednesday, they said they have a number of alternatives to consider.

The comments came when the company was asked about the ConAgra’s outstanding notes and bonds.

Under the planned split, the consumer brands business will be renamed Conagra Brands, Inc., and the frozen potato business will operate under the Lamb Weston name.

Conagra Brands is committed to a “strong and attractive” dividend and expects to maintain an investment-grade profile following the separation. The capital structure and capital allocation policy for Lamb Weston have not yet been finalized.

Executives would not specify any leverage targets.

The transaction is expected to be completed in the fall of 2016, said chief financial officer John Gehring.

Conagra Brands will be comprised primarily of the operations currently reported as the company’s consumer foods segment, which generated roughly $7.2 billion in fiscal 2015 revenues. It will be led by ConAgra chief executive officer Sean Connolly and will be based in Chicago.

Lamb Weston’s portfolio will consist of frozen potato, sweet potato, appetizer and other vegetable products. For fiscal 2015, Lamb Weston generated revenues of about $2.9 billion. The Lamb Weston management team will be announced at a later date, according to a news release.

ConAgra, an Omaha-based maker of prepared foods, reiterated its plans to use the net proceeds from the pending sale of its private brands business primarily for debt reduction.

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