Darling Ingredients gets better coupon, tenor after refi of 5 3/8% notes

By Devika Patel

Knoxville, Tenn., May 9 – Darling Ingredients Inc. obtained a better interest rate and longer tenor on its debt after tendering for and redeeming its $500 million outstanding 5 3/8% senior notes due 2022 and issuing $500 million eight-year 5¼% senior notes.

“We launched and priced a refinance of our 5 3/8% $500 million U.S. senior notes to new eight-year term at 5¼% rate and closed the transaction in early Q2,” executive vice president and chief financial officer Brad Phillips said on the company’s first quarter ended March 30 earnings conference call on Thursday.

First quarter adjusted EBITDA was $103.4 million.

Cash and cash equivalents were $95,716,000 as of March 30, 2019, compared to $107,262,000 as of Dec. 29, 2018. The company also has $901.5 million of funds available under its revolving credit facility.

Long-term debt, net of current portion, was $1,663,763,000 as of March 30, 2019, compared to $1,666,940,000 as of Dec. 29, 2018.

As of March 30, the company’s covenant leverage ratio was 3.25x.

On March 27, Darling began a cash tender offer for any and all of its 5 3/8% senior notes due 2022 and said it would redeem any notes that remained outstanding after the tender at 101.344, which is less than the purchase price under the tender.

Under the tender, the company offered to purchase the notes at $1,015.25 per $1,000 of notes plus accrued interest to the settlement date of April 3.

The offer expired at 5 p.m. ET on April 2, and on April 3, the company said that holders had tendered $374,142,000, or 74.83%, of the notes as of the expiration date.

The company accepted for purchase and paid for all of the tendered notes on April 3.

Holders received $1,015.25 per $1,000 principal amount plus accrued interest to the settlement date.

The amount tendered as of the April 2 expiration does not include any notes that may have been tendered under guaranteed delivery procedures.

The deadline for tenders through guaranteed delivery procedures was the close of business on April 4. Settlement of those notes was slated for April 5.

The tender offer was conditioned on Darling completing a debt financing that generated enough proceeds for the repurchase of notes under the tender offer.

Also on April 3, the company completed its $500 million issue of eight-year senior notes (Ba3/BB+) that were sold at par to yield 5¼%.

The notes had priced on March 28 via left lead bookrunner BofA Merrill Lynch.

Joint bookrunners were Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Citigroup Global Markets Inc.

The yield printed at the tight end of the 5¼% to 5 3/8% yield talk and well inside of initial talk in the high 5% area.

Proceeds were earmarked for the tender/redemption of the 5 3/8% notes due 2022.

Darling is an Irving, Texas-based developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients.

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