Agrilink Foods has secured a new $470 million credit facility as part of a larger recapitalization plan that included a $175 million equity investment by the company's new sponsor, Vestar Capital Partners. According to Earl Powers, cfo, the Rochester, N.Y., frozen-food processing company decided to undertake a recapitalization because it needed more long-term capital in the business for growth. "As a [subsidiary of Pro-Fac Cooperative], we were highly leveraged," Powers said. "[To stay competitive], we needed more capital and more flexibility than our current capital structure would allow."
The new credit comprises a five-year, $200 million revolver priced at LIBOR plus 23/ 4% and a six-year, $270 million term loan "B" priced at LIBOR plus 3%. Both the equity injection and the new facility were used to repay the company's existing credit. That facility included a five-year, $200 million revolver and a five-year, $100 million "A" term loan, both priced at LIBOR plus 23/ 4%. It also included a six-year, $175 million term loan "B" and a seven-year, $180 million "C" term loan priced at LIBOR plus 31/ 4% and LIBOR plus 31/ 2%, respectively.
J.P. Morgan led the new bank deal and also helped Agrilink find the most compatible sponsor. Although Harris Bank was the lead bank on the existing credit, J.P. Morgan had developed a relationship with the company. "J.P. Morgan was the best organization to take us into the marketplace," Powers said. Meanwhile, Vestar Capital Partners was chosen not only because of the sponsor's interest and ideas, but also because it has the best "cultural fit" with Agrilink, he explained.