Hart secures $3b for packaging deal

Graeme Hart. Photo / Dean Purcell

New Zealand's richest man, Graeme Hart, has pulled off a multi-billion dollar funding deal amid market turbulence.

Hart's packaging company Reynolds Group Holdings said it had completed a private placement of US$1.5 billion ($1.8 billion) in senior secured notes and US$1 billion of senior notes, at 7.875 per cent and 9.875 per cent respectively, both due in 2019.

The proceeds from the private placement would be held in escrow until the completion of a proposed acquisition of Graham Packaging Company.

Reynolds Group had also amended existing senior secured credit facilities, with lenders providing incremental term loans amounting to US$2 billion, to be funded on the closing date of the Graham Packaging acquisition.

The company intended to use the proceeds from the offering and incremental term loans to finance the acquisition, repay debts and pay related fees and expenses.

Reynolds Group is a global manufacturer and supplier of consumer food and beverage packaging and storage products.

Graham Packaging supplies rigid plastic containers for the food, specialty beverage and consumer products markets.

Reynolds Group in June said it had entered into a merger agreement to buy all outstanding shares of Graham Packaging for US$25.50 in cash a share.

The price represented a total enterprise value, including net debt, of about US$4.5 billion.

The company said it expected to realise strategic benefits and operational cost savings as a result of the combination.

Hart's investment company Rank Group includes New Zealand pulp and paper company Carter Holt Harvey, which was bought in 2006 for $3.3 billion.

Investment banking sources in May said Hart was in the process of selling off Carter Holt Harvey to focus on his US and European assets.