The company, formed by a megamerger that ultimately left it saddled with around $30 billion of debt, is fixing its balance sheet as part of a broader effort to remake itself. An earnings slump before the pandemic spurred S&P Global Ratings and Fitch Ratings to downgrade the company to junk in February 2020.
Since then, Kraft Heinz has shown signs of improving its earnings, helped in part by a pandemic that has boosted demand for quick-to-serve meals. And it’s been paying down borrowings.
The company’s announcement in February of the $3.35 billion sale of its Planters snack brand to Hormel Foods Corp. prompted Fitch Ratings to lift its outlook for the company to positive, and S&P Global Ratings noted the same month that the food maker had benefited from homebound consumers buying more packaged foods.
Both S&P and Fitch have Kraft Heinz at BB+, the highest junk-bond grade. Moody’s Investors Service has the company at Baa3, the lowest investment-grade rating.
Kraft Heinz’s debt buyback of as much as $2.8 billion includes principal and premium in its purchase price, but leaves out accrued and unpaid interest, according to a company filing. The offer expires Friday. BofA Securities, JPMorgan Chase & Co. and Wells Fargo Securities are leading managers of the deal, according to the filing.
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