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LPC-Labeyrie cuts loan size as investor pushback heats up
April 25, 2017 / 11:11 AM / 5 months ago

LPC-Labeyrie cuts loan size as investor pushback heats up

LONDON, April 25 (Reuters) - French food producer Labeyrie Fine Foods has reduced the size of its leveraged loan by €45m to €455m and increased pricing on the deal, making it the latest borrower to suffer from investor pushback in Europe’s loan market.

The loan market has been dominated by refinancings and repricings so far this year as borrowers have taken advantage of the supply-demand imbalance.

That helped push pricing to a low of 300bp in March for some Single B issuers and loan terms were weakened to allow borrowers more flexibility including taking dividends, adding leverage and making acquisitions.

However, in recent weeks the number of deals has increased and a healthy pipeline of event-driven financings has built up, enabling investors to pushback against those aggressive terms.

“The market was overheated and squeezed by a lack of supply. Now there is supply and investors have options so we have seen some pushback. Investors have a desire to put money to work but they are not forced to wave everything through. Labeyrie is the most dramatic pushback so far,” a syndicate head said.

REDUCED DIVIDEND

Shareholders are now set to take a reduced dividend of around €90m from Labeyrie’s €455m term loan B. A partial PIK repayment that was set to take place has also been cancelled. Prior to the changes, shareholders were due to take over €100m in a dividend payment, banking sources said.

Pricing has also increased by 50bp to 425bp over Euribor, from initial guidance of 375bp over Euribor. A 0% floor remains the same.

OID guidance has also widened to 99.5 from 99.75.

The changes have made Labeyrie’s loan more attractive to investors, which are also placated by lower leverage of 4.5 times, from an initial 5.0 times at launch.

The new loan is still set to lower the company’s cost of debt by refinancing its existing €355m, 5.625% 2021 senior bonds.

The TLB forms part of a wider financing, which also includes a €65m revolving credit facility.

BNP Paribas and Deutsche Bank are global coordinators, along with HSBC and Natixis as bookrunners. Lenders have been asked to recommit by Wednesday, with allocations due on Thursday.

WELCOME RELIEF

Other deals in recent weeks were forced to increase pricing to attract investors, include German cigarette filter maker Acetow, chemicals manufacturer ASK Chemicals, Italian business process outsourcing company Comdata and Polish wood material company Pfleiderer.

The pushback has been welcomed by investors and bankers alike. Bankers have been under pressure from sponsors to offer increasingly risky terms at increasingly lower fees.

“Investors seem to be a bit more discerning, but they only go hard when they can smell blood. There has been a little more choice in the last couple of weeks and the market feels a bit more fragile. Investors are taking the opportunity to rebalance the loan market a little bit and it won’t do the market any harm,” a second syndicate head said.

Labeyrie, owned by a three-way joint venture formed in 2014 between management, PAI Partners and French agricultural co-operative Lur Berri, specialises in upmarket and festive food products including smoked salmon, prawns, foie gras, blinis and frozen delicatessen.

Labeyrie was not immediately available to comment.

Its products are sold under own brand names including Labeyrie, Blini and Delpierre, as well as supplying the private labels for major supermarkets. (Editing by Christopher Mangham)

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