Evansville-based Berry Global Group Inc. (NYSE:BERY) has responded to a letter from one of its major shareholders which criticizes Berry senior management and the board of directors for failing to give the market confidence in their management efforts.
Canyon Capital Advisors LLC owns 7%, or about 9 million shares, of Berry common stock.
In the letter, Canyon says it believes “that Berry continues to be significantly undervalued and that there are readily available steps by which the company can unlock significant value for shareholders.”
Further, the letter states “the company’s stock has lagged that of peers due to persistent concerns by investors regarding organic volumes, and the stock has been acutely discounted.”
In response, Berry management said in a letter it “regularly engages with shareholders, including Canyon Capital, and values their constructive input.”
The company says the board and management regularly review the operational portfolio and capital allocation to “ensure that we are best positioned to drive shareholder value, including through divestitures, in order to maintain our strong balance sheet and proven track record of free cash flow growth.”
Canyon is asking senior management to take three steps:
- publicly announce that it has hired an investment bank or other financial advisors to develop a clear plan of action toward accelerated deleveraging
- commit to achieving an investment grade rating (and cease M&A activity other than deleveraging transactions)
- get in front of environmental, social and governance (“ESG”) trends and correct market misperceptions about sustainability.
In terms of sustainability, Berry says it remains “deeply focused,” saying it’s working directly with customers to reduce plastic waste and meet its sustainability goals.
Last month the company announced a partnership with Georgia-Pacific Recycling to create what the companies call a closed-loop system to recover, segregate and reprocess post-consumer resin.
Canyon said it believes Berry has the global scale and innovation expertise to lead the industry sustainably, but more needs to be done to unlock value for shareholders.
Berry management said it will continue to engage with Canyon Capital and all shareholders to execute a strategy to enhance value.
Click here to view the letter from Canyon Capital.
Click here to view the entire response from Berry.