Frozen foods maker Iglo Group has launched a 1.6 billion euro ($2.18 billion) covenant-lite loan and bond refinancing which will cut the company's borrowing costs and give flexibility for a potential IPO, banking sources said on Friday.
Iglo Group is owned by private equity firm Permira and is known as Birds Eye in the UK and Ireland and Findus in Italy.
Deutsche Bank, Credit Suisse and Nomura have been mandated to lead the deal, which will refinance existing loans, cut pricing and allow a potential listing, the bankers said.
The deal consists of up to 1.1 billion euros of leveraged loans and up to 750 million euros of high yield bonds, which will be denominated in euros and sterling, they added.
Permira declined to comment.
The refinancing is being done on a covenant-lite basis and does not include traditional maintenance covenants that protect investors.
European investors initially protested against covenant-lite loans, which are common in the US, but have become more willing to invest in these riskier deals due to a lack of other deals to invest in.
A loan backing the buyout of French veterinary pharmaceutical firm Ceva Sante Animale was Europe's first 'pure' covenant-lite loan earlier this year.
Iglo has struggled to meet the covenants on its existing debt and agreed to reset covenants in December 2013 after the company did not perform as well as expected.
Birds Eye was forced to withdraw some products in Britain and Ireland amid the horse meat scandal in February 2013 and a new CEO, Elio Leoni, was also appointed in May 2013.
The refinancing will be shown to investors at a bank meeting on June 24 in London and commitments are due July 2.
PRICE REDUCTION
A six-year euro term loan has price guidance of 450 basis points (bps) over Euribor and 500bps on a six-year sterling term loan. The existing loan pays 475bps on euros and 537.5bps on sterling.
An 80 million euro, five-year revolving credit is also included, with price guidance of 425bps.
Permira bought Iglo from Unilver in 2006 for 1.8 billion euros, backed by 1.5 billion euros of leveraged loans.
The private equity firm later bought the remaining part of Unilever's European frozen food business, Findus Italy, in a deal financed with 500 million euros of loans.
In 2012, Permira paid itself a 319 million euros dividend by raising new loans and taking some cash from Iglo's balance sheet.
