Background

Hereford Contract Canning (HCC) Limited and its sister company, Corinthian Brands Limited (CBL), were being marketed for sale by their private shareholders. Due to the structural complexities of the business combination, including reputational risk associated with certain drinks brands and alcohol-related canning activities, the deal was restructured to focus solely on HCC’s pure canning business.

The private equity investor chosen had historic experience in the canning and fast-moving consumer goods (FMCG) sector, and a strong skill set in operational and transformational investment, and was therefore the ideal partner to source a new management buy-in team to acquire the business. FRP was engaged as the exclusive debt adviser by the private equity investor. Our Debt Advisory team launched a competitive debt-raising process to deliver the acquisition finance, and the working capital facilities required to complete the deal and support the future investment plan. This included investment in the existing canning capacity and also new machinery to substantially increase future production capacity.

Action

The deal was complex due to the buy-in management buyout (BIMBO) nature of the transaction, as well as the substantial, ongoing step change in profitability that the business was delivering during the process; this made it challenging to isolate an appropriate structuring EBITDA.

Our team prepared suitable investment marketing materials to sell the credit to the market, highlighting the USPs of the business, and the favourable underlying macro commercial backdrop to the investment. They also managed lender questions and answers and due diligence calls, supported the creation and delivery of a management presentation, developed a covenant model, and subsequently negotiated key lending terms with three fully credit-approved lenders.

Outcome

The private equity investor was advised by our Debt Advisory team on the debt raising to support its investment. We were able to ensure it secured efficiently structured unitranche and working capital facilities, alongside a committed long-term capex facility and a further accordion option to support the longer-term investment plans of the business.

Given the fundamental capex-led investment thesis, our team took a lead role in negotiating an appropriate covenant suite which provided the business with enough flexibility to deliver its business plan and growth strategy.