Japan: Suntory prices US$500 million bond to finance general corporate purposes

Suntory Holdings has priced a US$500 million bond to finance general corporate purposes including debt repayment, as CEO Takeshi Niinami denies Boston Beer investment, The Drinks Business reported on June 5.

Publicly traded companies typically issue bonds to raise capital to maintain operations, grow product lines and open new locations, or finance business expansion projects.

The whisky maker, responsible for Japanese whisky brands Yamazaki and Hibiki as well as Bourbon labels Jim Beam and Maker’s Mark, is currently one of only a handful of non-financial Japanese companies to tap the US currency debt market this year.

The US$500m note has been issued as a five-year note, making it an intermediate-term bond.

The yen has plunged to its weakest against the dollar since 1990. As a result, Japanese sales of bonds overseas this year have been dragged down because of surging borrowing costs in home-currency terms.

Proceeds from Suntory’s five-year note will be used for general corporate purposes including debt repayment, according to a person familiar with the matter who asked not to be identified. Suntory has a US$500 million note maturing in October, as reported by Reuters, where this story was first published.

In a statement sent to the drinks business today, the company said of the bond: “We decided on the total issue amount of US$500m, namely to repay our US dollar denominated notes that mature in October 2024, as well as liquidity and investor demands.”

Japan’s population decline has led to speculation that the company will turn attention overseas. CEO Takeshi Niinami told Bloomberg this morning that “the declining population in Japan is really demotivating us to stay here”.

However, Niinami denied claims that the company is in talks to buy Boston Beer Co., the US brewer behind the Samuel Adams brand. Indeed, following a story which broke over the weekend about a potential acquisition, Niinami told Bloomberg: “We have no negotiation with Boston Beer.”

He claimed that Japan continues to be the company’s primary focus, and noted that despite Japanese consumption being “weak at this moment”, new product innovation is key to getting older, wealthy consumers on board.

Speaking on wage increases in Japan, Niinami said: “The reason behind [them] is a huge shortage of labour, so businesses have to keep raising wages, otherwise we can’t secure labour.”

However, the Suntory boss said he was “optimistic”, and described the economic situation in Japan going forward as “thrilling”.

05 June, 2024