Iglo Auction Comes a Cropper
Blackstone and BC Partners had offered only £2.5 billion ($3.1 billion), short of the £2.6 billion P…Blackstone and BC Partners had offered only £2.5 billion ($3.1 billion), short of the £2.6 billion Permira had set as a minimum and well short of the £2.8 billion it had hoped for. Other potential bidders, including Thailand's Charoen Pokphand, had already bailed out.
The end of the prolonged Iglo auction process leaves Permira looking at other options for the company it bought in 2006 from Unilever for 1.7 billion euros, later bolting on Findus Italy for a further 800 million. Birds Eye in the UK is part of Iglo.
One such option could be refinancing Iglo's debt to raise money to pay Permira a dividend, Reuters reported. Bankers who had been working on a financing package of up to 2.4 billion euros to back a new deal are said to believe that a so-called dividend recapitalization is a viable option, despite the fact they have been little used since the credit crisis.
At the end of 2011, Iglo had net debt of some 1.4 billion euros, equating to around four times the company's projected 2012 earnings before interest, tax, amortization and depreciation of about 350 million euros.
While a new deal for Iglo could have attracted a debt package of around six times its annual earnings, increasing Iglo's debt by some 700 million euros, banks could be reticent about providing that much in a refinancing, particularly when there had been such a difference of opinion over price between buyer and seller, one banker told Reuters.
