Findus in better health after capital overhaul

The deal allows the heavily-leveraged group to slash debt from £721m to £366m, diluting the stake of its backer Lion Capital.

Findus, which owns Grimsby’s Young’s Seafood, was bought by the private equity firm for £1.1bn in September 2008 as the credit crunch was taking hold. The food group saw turnover slide nearly four per cent in 2010 and it slumped to £151.6m losses in part because of heavy financing costs.

The private equity group had toyed with a break-up of the business, according to reports, but talks collapsed and it was forced to fend off an approach from rival buyout firm Triton.

Findus said the “consensual restructuring” leaves it with a “sensible and sustainable capital structure from which to build the business”.

“The business is stabilising which is really good news, particularly in the UK,” said Findus chief executive Chris Britton.

“We’ve done some nice work restabilising the business. This restructure gives us an opportunity to move forward from a good, solid base. I feel pretty good about it.

“This has been a long restructuring. We got there in the end.”

Junior debt holders including JP Morgan and Highbridge Capital have converted some of their debt into equity in Findus. US insurer Northwest Mutual has also joined Findus’ investors.

The deal leaves Lion, JP Morgan and Highbridge holding roughly equal stakes, with Northwest taking a single digit percentage stake.

A spokesman declined to say how much of their debt has been converted into equity. Under the deal, the £1bn turnover food giant receives £220m to bolster its balance sheet.

Of this, £125m is going to repay some of its senior debt, held by a syndicate of banks including Royal Bank of Scotland.

Another £25m will be held on Findus’s balance sheet as cash, and the group also has a new £70m additional debt facility.

“This restructuring will strengthen the group’s balance sheet and give the company an appropriate capital structure from which to grow and develop,” it said.

“Following challenging market conditions and adverse foreign exchange movements Findus has a clear and focused strategy to take the business forward.”

Mr Britton, who lives near Wetherby, said the company “can be excited for the future.”

He said work including its tie-up with celebrity chef Jamie Oliver, its purchase of Cumbrian Seafood in late 2011, cost cuts and winning more private label work are paying off.

“We’ve got fundamental growth drivers in the UK because we’re in fish. It’s a good consumer protein to be in and we’ve got great expertise in it.”

The group employs about 6,000 globally, including 2,000 in Grimsby. It is the UK market leader in chilled and frozen seafood in the UK, with a 40 per cent market share.

It supplies most of the major UK retailers with private label seafood. It is also a market leader in frozen food in Norway, Sweden and France, and a big player in frozen vegetables in Spain.

The company has earnings before interest, tax, depreciation and amortisation (EBITDA) of about £100m, said a spokesman. This means its debt to earnings ratio falls to a more manageable level.

However, a food industry expert said the capital restructure looks like a “sticking plaster”.

“It looks like a business which needs to be broken up,” he said.

“Young’s is fundamentally a different business to Findus and it needs to be in separate ownership.”