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Current Position:Home » News » Special Foods » Baby Food » Topic

CVC seeks dividend payout from Continental Foods

Zoom in font  Zoom out font Published: 2014-07-03  Origin: Reuters  Views: 73
Core Tip: Private equity firm CVC is set to take around 160 million euros as a dividend payment from its Belgium-based Continental Foods as part of a wider 425 million euro covenant-lite loan refinancing, banking sources said on Wednesday.
Private equity firm CVC is set to take around 160 million euros (218.25 million) as a dividend payment from its Belgium-based Continental Foods as part of a wider 425 million euro covenant-lite loan refinancing, banking sources said on Wednesday.

CVC acquired Continental Foods, the former European consumer food business of Campbell Soup, in October 2013 backed with a 320 million euro, all senior leveraged loan financing, according to Thomson Reuters LPC data.

The business includes brands of soups, sauces and simple meals such as Liebig and Royco in France, Erasco in Germany, Bla Band in Sweden and Devos Lemmens and Royco in Belgium.

It has now decided to conduct a dividend recapitalisation - a process whereby debt in a business is refinanced and increased in order for shareholders to take a dividend payment.

CVC declined to comment.

The financing will be split between a 285 million euro first lien loan and a 75 million euro second lien loan. There is also a 65 million euro revolving credit facility.

The deal will be done on a covenant-lite basis, removing traditional maintenance covenants that protect investors.

European investors initially protested against covenant-lite loans, which are common in the US, but the riskier structure has increased in popularity due to a lack of other deals to invest in. Second lien loans have also gained favour in Europe recently as borrowers' reliance on the high yield bond market lessens. 

BNP Paribas, ING and Rabobank are leading the deal which will be shown to institutional investors at a bank meeting on Thursday when pricing will emerge, the banking sources said.

The dividend recapitalisation will take Continental Foods' debt to earning to around 4.5 times on the senior loans or 5.7 times in total from a current level of 2.85 times. After CVC's buyout, debt to earnings stood at 4.75 times.

"Since Continental Foods was acquired it has performed really well with operational performance and top line growth. It has deleveraged quickly," one of the sources said.

Continental Foods has around 1,300 full time employees and generated 407 million euros in sales in the year to July 2013, according to CVC's website.

 
 
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