Lamb Weston Reports Pricing of Private Note Offering

Eagle, Idaho, USA-headquartered Lamb Weston announced on November 1 that it, along with certain selling note holders, has priced the previously announced offering of the $833 million aggregate principal amount of its 4.625% senior notes due in 2024, and an additional $833 million aggregate principal amount of its 4.875% senior notes due in 2026. The private offering is exempt from registration requirements of the Securities Act of 1933, as amended, and certain of the company’s material domestic subsidiaries will guarantee the notes.

Logo 2 lamb weston full color logoLamb Weston intends to use the net proceeds of the issuance of the notes to partially fund a cash payment to ConAgra Foods, Inc. The company will not receive any proceeds from the sale of the notes by the selling note holders.

On November 9, Chicago, Illinois-headquartered ConAgra is scheduled to complete its spinoff of Lamb Weston Holdings, Inc. The transaction will be comprised of a 3:1 payout of Lamb Weston (LW) common stock to ConAgra (CAG) shareholders of record as of November 1.

According to analysis from the Beyer Group, a commercial banking firm focused on privately owned small- to mid-market sized companies, frozen potato products are a high margin range with great growth potential. Eighty-three percent of Lamb Weston's 2016 revenue is from its restaurant/foodservice business. It went on to point out that in the USA 60% of restaurants sell french fries, which just happens to be the most profitable item on menus with the exception of beverages.

The Beyer Group issued the following summary statement: “ConAgra is casting off its commercial frozen potato business to focus on the consumer grocery brand portfolio. This divestiture has the potential to unburden a profitable and steadily growing business from the yoke of a larger organization. Uncovering the debt burden LW ends up through spinoff will be crucial in determining the value of the newly formed company. If LW ends up with acceptable leverage, good liquidity, and a low P/E ratio, this business could be a good long-term investment with little downside. French fries are eaten in good times and bad.”