Nomad Foods expects €14 million annualized savings from refinancing

By Devika Patel

Knoxville, Tenn., May 25 – Nomad Foods Ltd. expects to save €14 million per year on a cash basis from its April refinancing of debt.

In the refinancing, the company increased its U.S. seven-year covenant-light first-lien term loan B to $610 million from $510 million. In addition, Nomad Foods Ltd. launched and priced a €400 million issue of seven-year senior secured notes (B1/BB-) at par to yield 3¼% and subsidiary Nomad Foods BondCo plc redeemed all €500 million of its senior secured floating-rate notes due 2020.

“We fortified our balance sheet with a successful refinancing of approximately €1.5 billion of debt subsequent to the quarter end,” chief executive officer Stefan Descheemaeker said on the company’s first quarter earnings conference call on Thursday.

“In doing so, we achieved a number of goals.

“First, we reduced our cost of capital and now expect annualized savings of €14 million on a cash basis.

“Second, we extended our maturities.

“Third, we hedged rate exposure” on part of the debt.

“And fourth, we diversified our lending base,” Descheemaeker said.

For the quarter, adjusted CapEx increased by €1 million year over year. Adjusted free cash flow was €69 million. And adjusted EBITDA decreased 11% to €89 million.

As previously reported, on April 21, the company upsized its U.S. seven-year covenant-light first-lien term loan B to $610 million (€570 million equivalent) from $510 million (€470 million equivalent) and firmed pricing at Libor plus 275 basis points, the low end of the Libor plus 275 bps to 300 bps talk.

In addition, the original issue discount on the U.S. term loan B was revised to 99.75 from 99.5.

Also, pricing on the company’s €500 million seven-year covenant-light term loan B was set at Euribor plus 300 bps, the low end of the Euribor plus 300 bps to 325 bps talk, and the issue price finalized at par, the tight end of the 99.75 to par talk.

The U.S. and the euro term loans still have a 0% floor and 101 soft call protection for six months.

Amortization on the U.S. term loan is 1% per annum. The euro term loan has no amortization.

The company’s now €1.15 billion-equivalent in senior secured credit facilities (B1/BB-), up from €1.05 billion-equivalent, also include an €80 million six-year revolver.

Goldman Sachs and UBS were the global coordinators on the U.S. loan and bookrunners with Credit Suisse and Deutsche Bank. Credit Suisse and Deutsche Bank were the physical bookrunners on the euro loan and bookrunners with Goldman Sachs and UBS. Credit Suisse is the administrative agent.

Recommitments were scheduled to be due at 10:30 a.m. ET on April 21.

Proceeds were used to refinance in full existing euro- and sterling-denominated term loans and floating-rate senior secured notes due 2020 and to pay related fees and expenses.

Other funds for the refinancing came from the new €400 million in senior secured notes, downsized from €500 million with the U.S. term loan B upsizing

On the same date, Nomad Foods said that its Nomad Foods BondCo plc subsidiary planned to redeem all €500 million of its senior secured floating-rate notes due 2020.

The debt was to be repaid on May 3 at par plus accrued interest, according to a notice from the issuer.

Also on April 21, the company launched and priced a downsized €400 million issue of seven-year senior secured notes (B1/BB-) at par to yield 3¼%.

The notes offering was reduced from €500 million, with €100 million of proceeds shifted to the concurrent term loan B.

Deutsche Bank and Credit Suisse managed the bond deal.

Proceeds will be used to refinance in full the euro- and sterling-denominated term loans and floating-rate senior secured notes due 2020.

Nomad Foods is a Feltham, England-based frozen foods company.

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