Westrock Coffee discloses new $75M equity investment, lowers EBITDA guidance

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Westrock Coffee Company (NASDAQ:WEST) traded slightly higher on Friday after announcing that it had attracted $75M in equity investments.

The company disclosed that it entered into definitive agreements with affiliates of HF Capital and the Herbert Hunt family to make aggregate equity investments of $75.0M through the purchase of 7.5M shares of common stock at a price of $10.00 per share.

The transactions are expected to close in August, subject to the satisfaction of customary closing conditions, including, in the case of the investment by HF Capital, termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Separately, WestRock Coffee (WEST) announced it has amended its existing $400M credit agreement to increase the defined total net leverage financial covenant for a period of time not to exceed April 1, 2025, and to raise the minimum interest coverage ratio from 1.50X to 2.00X.

CEO Scott Ford said the credit facility amendment should allow the company greater access to its revolver as it continues to build out the Conway, Arkansas extract and RTD facility.

“Together, the equity investments and credit agreement amendment form part of a capital plan that allows us to not only complete the previously announced Phase 1 and 2 expansions, which consist of high-speed can and glass bottle lines, a multi-serve bottle line, and bag-in-box and bulk lines, but now, two additional can lines and an industry leading product development lab and FDA certified pilot plant to develop coffee, tea, and other beverages including dairy and plant-based milks to support our customers’ innovation needs.”

The expansion of the extracts and RTD business in Conway is called the gateway to future EBITDA expansion and a top strategic priority.

WestRock (WEST) also updated its guidance, saying it now sees 2023 adjusted EBITDA growth to be flat to up 10% growth vs. +10% to +25% in the prior forecast. The reduction was driven by external factors, such as product launch delays by certain customers in response to macro-economic uncertainty, and internal factors, such as equipment delays and investments made to build out the infrastructure to support the launch of the extract and RTD facility.

Shares of WestRock Coffee (WEST) fell 1.45% in Friday afternoon trading.