R&R launches €255m high yield bond

UK-based ice cream manufacturer R&R has tapped the bond markets for the third time in 14 months.

Private equity-owned R&R Ice Cream has launched €255 million senior secured notes due in 2020 to finance the recent acquisition of Australia’s Peters Ice Cream, as announced in a statement on Wednesday.

The issuance is the third time in just over a year that the UK firm, one of the largest ice cream makers in Europe, has raised capital via a high yield bond.

The offering includes €150 million notes and the remaining €105 million balance is denominated in Australian dollars (AUS $152 million). 

It’s thought that Credit Suisse is one of the underwriters on the financing. Along with Barclays, the bank has underwritten every R&R deal since its buyout by French private equity firm PAI Partners last year.

To expand R&R, PAI acquired Peters Ice Cream from Pacific Equity Partners, Australia’s biggest private equity firm, for a rumoured AUS $450 million (£247 million; €309 million; $419 million) on 27 May.

Moody’s or S&P’s had not publically assigned any rating to the bonds as at time of going to press.

A spokesman for PAI Partners declined to comment beyond the statement.

In early May this year, R&R Ice Cream launched a £315 million (€383.4 million; $533.3 million) high yield bond to refinance existing notes that had been used to fund the original acquisition by PAI. Shortly afterwards, R&R also acquired UK-based ice cream business Fredericks Dairies, which manufactures Cadbury and Del Monte ice cream brands, for €57.3 million.

Total debt post the refinancing was expected to amount to €568 million including €253 million PIK Toggle notes due 2018, launched at the time of the original acquisition, Moody’s said. There is an undrawn super senior revolving credit facility of €60 million (extendable to €75 million) due 2020. It’s understood that there may also be some other minor debt facilities in place.

Moody’s assigned the bond a B1 rating and stated that the leverage on the firm was high at 5.9x net reported. S&P assigned a B rating and affirmed its CCC+ rating on the PIK toggle notes, highlighting some concern about increased risk of cash leakage from the group to these notes.

PAI bought R&R from Oaktree Capital Management in April 2013. For year ended 31 December 2013, R&R generated pro forma adjusted EBITDA of €107.4 million.