April 19, 2018 / 2:40 PM / 5 months ago

Hearthside Food buyout backed by US$1.645bn in loans

NEW YORK, April 19 (LPC) - US food contract manufacturer Hearthside Food Solutions’ leveraged buyout by private equity firms Charlesbank Capital Partners and Partners Group will be backed by US$1.645bn of loans, according to three sources familiar with the matter.

Charlesbank and Partners Group are buying Hearthside for an enterprise value of about US$2.4bn from existing owners Goldman Sachs and Vestar Capital Partners, the sources said. The acquisition was announced on April 17.

The financing includes a US$150m revolving credit facility that will be undrawn at close, a US$1.12bn secured term loan with a first priority claim and a US$375m unsecured bridge loan that will be replaced with permanent bond debt.

The underwriting group will include Goldman Sachs, Barclays, Nomura, Antares, Credit Suisse, RBC and Jefferies, the sources said. Goldman Sachs will lead the term loan and Barclays will lead the bridge loan and eventual bond, they said.

Goldman Sachs, Barclays, Jefferies, Nomura, Antares, Credit Suisse and Partners Group declined to comment. RBC and Charlesbank did not respond to requests for comment.

Hearthside’s leverage will stand at 5.25 times through the term loan and 7.0 times total, based on last-12 months’ Ebitda, or earnings before interest, taxes, depreciation and amortization of roughly US$213m, the sources added.

Equity capitalization will total at least US$905m, or 38% of total capitalization, based on the US$2.4bn purchase price, not factoring in transaction fees that will ultimately result in a larger equity contribution.

Closing is expected in 2Q18.

Goldman Sachs and Vestar acquired Hearthside from buyout shop Wind Point Partners in 2014 for US$1.1bn and have scaled the business in part through acquisitions, including Standard Functional Foods Group in 2017.

Hearthside makes baked foods and snacks, including energy bars, cookies and pretzels for food and beverage companies including Kellogg Co and Pepsi Co from its 25 manufacturing facilities in the United States and Europe. (Reporting Andrew Berlin Editing Michelle Sierra and Jon Methven)

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