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Cott’s DSS acquisition funding to include new bonds, ABL facility draw
By Angela McDaniels
Tacoma, Wash., Nov. 6 – Cott Corp. expects to ultimately fund its acquisition of DSS Group, Inc. with a combination of $615 million of new senior bonds, a $175 million draw under Cott’s ABL facility and $149 million of convertible and non-convertible preferred stock issued to the equity owners of DSS.
In the meanwhile, Cott has received $1,115,000,000 of committed financing from Barclays and Credit Suisse, according to a company presentation.
Cott agreed to acquire DSS Group, the parent company of DS Services of America, Inc., for about $1.25 billion, which includes the assumption of debt and the issuance of preferred shares to Crestview Partners and other selling shareholders.
Cott will seek to increase its ABL facility to $400 million from $300 million in connection with the acquisition.
In addition, Cott plans to assume the obligations under DS Services of America’s $350 million 10% second-priority senior secured notes due 2021.
As of Dec. 31, pro forma for the acquisition and excluding the issuance of the preferred shares, Cott would have a net leverage ratio of about 4.5 times.
Cott said it plans to focus on rapidly deleveraging. It will immediately apply excess free cash flow to redeem the preferreds, and it is targeting a net leverage ratio of 3.0 times to 3.5 times by 2018.
The acquisition is expected to close by the end of January and is subject to the consent of DS Services of America bondholders and regulatory approvals. It is not subject to any financing condition.
Cott is a beverage company based in Mississauga, Ont., and Tampa, Fla. DS Services of America is a water and coffee direct-to-consumer services provider based in Atlanta.
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