Nomad Foods, parent of the Birds Eye, Iglo and Findus brands, announced Monday it is planning to refinance existing loans, increase its revolving cash flow facility and issue a new €750 million ($911.4 million) bond, in order to finance its recent acquisition of Fortenova Group.
The group said its existing €553 million ($672 million) senior secured loan will be restructured under new seven-year terms.
Additionally, the company intends to restructure and upsize its existing revolving cash flow facility to a new €175 million ($212.7 million), five-year revolving cash flow facility.
It is also contemplating additional senior secured financing of up to €750 million ($911.4 million), subject to market conditions.
The proceeds of the funds -- including the new senior secured term loan and approximately €290 million ($352.4 million) of cash on its balance sheet -- will be used to repay a €400 million ($486.1 million) existing bond maturing in 2024, finance the Fortenova Group acquisition and pay transaction fees and expenses.
Bite out of Eastern Europe
In March, Nomad announced it had entered into an agreement to acquire Fortenova Group’s Frozen Food Business Group (FFBG), which includes Ledo, Frikom and other leading frozen brands, for approximately €615 million ($724.5 million).
The group first entered into exclusive negotiations to acquire the business in January.
FFBG is a leading European frozen food group operating in markets new to Nomad, including Croatia, Serbia and Bosnia & Herzegovina, Hungary, Slovenia, Kosovo, North Macedonia and Montenegro.
Philipp Hammerli, Bonafide Wealth Management portfolio manager, said it was expected Nomad would issue new debt to finance the purchase of Fortenova given the group's cash holdings, and that the raise may mean the group will focus on integration in the coming year or more, rather than another quick purchase.
"They will concentrate on cash flow and reduce debt over time so that the balance sheet allows for a new transaction when the timing is right -- but not the next 12-24 months," Hammerli told IntraFish.
'Strong start'
In May, the group reported record revenues and earnings for the first quarter, as it continues to benefit from changing consumer trends brought on by the global pandemic.
The group's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 15 percent to €138 million ($166.3 million) in the first quarter, while revenue increased 3.6 percent to €707 million ($852.1 million).
“This year is off to a strong start,” said Stefan Descheemaeker, CEO of Nomad Foods, at the time. “We achieved healthy organic revenue growth notwithstanding year-ago comparisons, which reflected elevated growth resulting from pantry loading at the onset of the pandemic.
“These results have us on pace to deliver another stellar year for Nomad Foods,” he said.
Shares of Nomad, which trade on the NYSE, are up nearly 25 percent since the start of the year.
