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Multifoods Refinances Without 'B' Tranche

23 Aug 2003

International Multifoods was able to refinance its credit without an institutional loan this time around after reducing its debt by more than $225 million since Nov. 2001, said John Byom, senior v.p. and cfo of the consumer foods and foodservice products company. The new credit is for $250 million and includes a five-year, $175 million revolver and a $75 million amortizing term loan. Byom said the covenants on the new pro rata deal are more flexible, as debt levels have been reduced due to repayments from strong operating cash flow and from proceeds from the sale of the company's foodservice distribution business.

Multifoods had acquired The Pillsbury Co.'s dessert and specialty products businesses from General Mills in 2001 after antitrust restrictions forced the sale of the businesses, Byom explained. This was in conjunction with Diageo's sale of Pillsbury to General Mills at this time. Multifoods had financed this transaction with the company's previous $450 million credit facility, that included a "B" loan, and $200 million in senior unsecured notes guaranteed by Diageo. "We leveraged the company up to $600 million in debt," he explained.

The credit is priced 75 basis points tighter on the new deal, Byom noted, stating that the facility is priced at LIBOR plus 21/4%, based on a grid tied to leverage. U.S. Bank leads the credit, while CIBC World Markets, the lead on the previous deal, is now an agent on the new facility. Byom said Multifoods selected U.S. Bank because of its long relationship with the lender and because of its appealing proposal. "U.S. Bank has been in our credits for about 100 years," he said. There is a total of 15 lenders in the syndicate, Byom added, stating that SunTrust Bank, J.P. Morgan, Harris Trust & Savings Bank, PNC Bank and Farm Credit Services are new credit syndicate members that the Minnetonka, Minn.-based company invited to join the deal.

23 Aug 2003