Constellation Brands Prices Offering of Senior Notes

Rhea-AI Summary

Constellation Brands, a leading beverage alcohol company (NYSE: STZ), announced the pricing of a public offering of $400.0 million aggregate principal amount of 4.800% Senior Notes due 2029. The notes will be senior obligations that rank equally with all of Constellation’s other senior unsecured indebtedness. The company intends to use the net proceeds for general corporate purposes, including working capital, funding capital expenditures, repayment of indebtedness, and other business opportunities. The offering is expected to close on January 11, 2024. BofA Securities, Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, and Wells Fargo Securities, LLC are acting as the joint book-running managers of the offering.

Financial Analyst

Constellation Brands, Inc.'s move to price a public offering of $400.0 million in Senior Notes at 4.800% is indicative of strategic capital raising efforts. The pricing slightly below par (99.889% of the principal amount) suggests a yield slightly above the coupon rate, potentially reflecting current market conditions and investor demand for corporate debt. The decision to allocate proceeds towards general corporate purposes, including working capital and repayment of existing debt, is a common strategy to optimize the capital structure and maintain liquidity. Investors should note that the success of such offerings can be influenced by the company's credit rating and prevailing interest rates.

Debt Market Analyst

The issuance of Senior Notes, which will rank equally with all other senior unsecured indebtedness, is a critical event for debt investors and the company's balance sheet management. The interest rate of 4.800% is a key figure, as it reflects the cost of borrowing for Constellation Brands relative to the risk-free rate and the company's credit risk premium. Investors will evaluate this against industry benchmarks and the current yield curve. The involvement of top-tier financial institutions as joint book-running managers could enhance investor confidence. However, the terms of the offering must be scrutinized, such as covenants and call provisions, which can significantly affect the value of these notes over time.

Market Research Analyst

Constellation Brands' decision to use the net proceeds for a variety of corporate purposes may signal a proactive approach to capital management. This could have implications for the company's strategic investments and operational flexibility, which are crucial in the competitive beverage alcohol industry. The company's ability to fund capital expenditures could support growth or efficiency initiatives, while repaying indebtedness may improve financial ratios and reduce interest expense. The timing and size of the offering might also reflect the company's assessment of the market's receptiveness to new debt issues and its capital needs.

VICTOR, N.Y., Jan. 09, 2024 (GLOBE NEWSWIRE) -- Constellation Brands, Inc. (NYSE: STZ), a leading beverage alcohol company, announced today that it priced the public offering of $400.0 million aggregate principal amount of 4.800% Senior Notes due 2029 (the "notes") for a public offering price of 99.889% of the principal amount of the notes. The notes will be senior obligations that rank equally with all of Constellation’s other senior unsecured indebtedness.

Closing of the offering is expected to occur on January 11, 2024, subject to the satisfaction of customary closing conditions. Constellation intends to use the net proceeds from the offering for general corporate purposes, including working capital, funding capital expenditures, repayment of indebtedness and other business opportunities.

BofA Securities, Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, and Wells Fargo Securities, LLC are acting as the joint book-running managers of the offering. The notes are being offered only by means of a prospectus, including a prospectus supplement, copies of which may be obtained by contacting BofA Securities, Inc. toll-free at (800) 294-1322 or emailing dg.prospectus_requests@bofa.com, contacting Goldman Sachs & Co. LLC toll-free at (866) 471-2526 or emailing prospectus-ny@ny.email.gs.com, contacting J.P. Morgan Securities LLC collect at (212) 834-4533, or contacting Wells Fargo Securities, LLC toll-free at (800) 645-3751 or emailing wfscustomerservice@wellsfargo.com. Alternatively, the prospectus and prospectus supplement may be obtained by visiting EDGAR on the SEC website at https://www.sec.gov.

This announcement does not constitute an offer to sell or a solicitation of an offer to buy notes. The notes will not be offered or sold in any state or jurisdiction in which such an offer, solicitation, or sale would be unlawful.

ABOUT CONSTELLATION BRANDS
Constellation Brands is an international producer and marketer of beer, wine, and spirits with operations in the U.S., Mexico, New Zealand, and Italy. Constellation’s brand portfolio includes Corona Extra, Modelo Especial, the Robert Mondavi Brand Family, Kim Crawford, Meiomi, The Prisoner Wine Company, High West, Casa Noble, and Mi CAMPO.

FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Statements which are not historical facts and relate to future plans, events, or performance are forward-looking statements that are based upon management’s current expectations and are subject to risks and uncertainties. The forward-looking statements are based on management's current expectations and should not be construed in any manner as a guarantee that such events or results will in fact occur. All forward-looking statements speak only as of the date of this news release and Constellation Brands undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Detailed information regarding risk factors with respect to the company and the offering are included in the company’s filings with the SEC, including the prospectus and prospectus supplement for the offering.

MEDIA CONTACTS			INVESTOR RELATIONS CONTACTS
Amy Martin	585-678-7141	amy.martin@cbrands.com	Joseph Suarez	773-551-4397	joseph.suarez@cbrands.com
Carissa Guzski	315-525-7362	carissa.guzski@cbrands.com	Snehal Shah	847-385-4940	snehal.shah@cbrands.com
			David Paccapaniccia	585-282-7227	david.paccapaniccia@cbrands.com

A downloadable PDF copy of this news release can be found here: http://ml.globenewswire.com/Resource/Download/a9aeddd8-0174-414d-a684-9e6c656e9c05

What did Constellation Brands announce?

Constellation Brands announced the pricing of a public offering of $400.0 million aggregate principal amount of 4.800% Senior Notes due 2029.

What is the ticker symbol for Constellation Brands?

The ticker symbol for Constellation Brands is STZ.

When is the expected closing date for the offering?

The offering is expected to close on January 11, 2024.

What are the intended uses of the net proceeds from the offering?

Constellation Brands intends to use the net proceeds for general corporate purposes, including working capital, funding capital expenditures, repayment of indebtedness, and other business opportunities.

Who are the joint book-running managers of the offering?

The joint book-running managers of the offering are BofA Securities, Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, and Wells Fargo Securities, LLC.