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New credit facility gives Silgan more flexibility

By Helen Glaberson , 04-Aug-2011

A new $1.9bn (€1.3bn) senior secured credit facility will provide Silgan with greater flexibility in regards to its strategic initiatives to make acquisitions, such as paying dividends, repurchasing stock and incurring additional debt, said the packaging firm.

We were able to leverage the momentum we created earlier this year and complete a transaction with terms and pricing more favourable than our existing agreement,” said Bob Lewis, Silgan executive vice president and chief financial officer.

“The completion of this new credit facility provides greater flexibility, additional borrowing capacity and longer maturities, leaving us well positioned to pursue various strategic alternatives,” he remarked.

Banks including Deutsche Bank Securities, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets and Wells Fargo Securities helped Silgan secured the lending arrangement.

Profit up

Last week saw the US beverage and food packaging group post a rise in total revenue during the quarter in its second quarter results to $822.2m from $693.9m in 2010.

The packaging suppliers said its recently acquired businesses IPEC, DGS and Vogel & Noot contributed positively to earnings, said the firm, helping to offset the higher resin costs in its closures and plastics segments.

Margins in Silgan’s closures segment fell to 12.3 per cent from 14.5 per cent as the firm failed to pass on higher resin costs to customers. Operating margin for Silgan’s plastic containers segment increased to 2.9 per cent from 2.7 per cent over the same periods.

Margins for the firm’s largest segment, metal containers, slipped to 8.9 per cent from 11.6 per cent as the firm was hit by a $3.3m charge to settle a product liability dispute.

Net sales for the first six months of 2011 increased 12.3 per cent from $1.36bn to $1.53bn. In its 2011 outlook, the company confirmed its estimate of adjusted net income per diluted share for the full year in the range of $2.60 to $2.70.

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