Func Food seeks consents to amend terms of €38 million bonds due 2019

By Angela McDaniels

Tacoma, Wash., Jan. 10 – Func Food Group Oyj began a consent solicitation for its €38 million senior secured bonds due 2019, according to a notice to bondholders.

Func Food Sweden AB acquired ACMF Holding AB and two of its subsidiaries in June 2015. The company said the merger resulted in a number of technical and financial implications for Func Food Sweden and for the Func Food group as a whole.

Also, the equity position within the group’s Swedish division is not at an adequate level to support the division’s growth targets and business initiatives going forward, according to the notice.

As a result, the issuer wishes to amend the bonds in order for the group to, among other things, mitigate the technical obstacles related to Func Food Sweden’s statutory position after the merger, restore the equity position within the Swedish entity and enhance the liquidity position of the wider group.

The consent solicitation will end at 11 a.m. ET on Feb. 3.

Responses are needed from the holders of at least 20% of the bonds in order to form a quorum. In order to make the proposed amendments, consents are needed from the holders of at least two-thirds of the bonds for which replies are received.

Proposed amendments

The issuer wants to amend the terms and conditions that regulate the security granted for the bonds and to make a partial release of the transaction security over an intercompany loan, to change the prepayment structure of the bonds and to disburse the prefunded earn-out amount.

The proposed amendments include the following:

• A maximum of €10 million of the existing €33,082,000 intercompany loan, being subject to transaction security, made available by the issuer to Func Food Sweden will, at any time prior to the final maturity date of the bonds, be converted into unconditional shareholders’ contribution and/or be subject to set-off against any unpaid shareholders’ contribution made by the issuer to Func Food Sweden;

• A waiver will be granted for any scheduled amortization payments payable in 2017 under the current amortization plan of the bonds and any default occurring due to the partial release of the transaction security granted over the intercompany loan; and

• The prefunded earn-out amount of SEK 70 million currently in escrow will be disbursed toward mandatory amortization of the bonds.

Provided that the bondholders vote in favor of the amendments, the issuer will ensure that €2 million to €3 million of additional equity, of which €500,000 was contributed on Dec. 20, is irrevocably and unconditionally contributed to the issuer in the form of a convertible subordinated loan.

The amendments will be subject to the application of any amounts standing to the credit of the bank accounts after Feb. 28 toward mandatory amortization and the issuer receiving the €2 million to €3 million of additional equity within two months of the date of implementation on the amendments.

The solicitation agent is Pareto Securities AB (+46 8 402 5223).

Func Food Group is based in Tampere, Finland.

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