Picard BondCo S.A. - New Issue Comment
Transaction Summary: Bond refinancing and another aggressive dividend recap
Picard, the French frozen food retailer, is marketing €1.5bn of new bonds in order to refinance its whole debt structure and fund distribution to shareholders. The new €1,190m senior secured notes due 2023 (B+/B2 by S&P/Moody’s), along with new €310m senior notes due 2024 (B-/Caa1) and €98m cash in hand, will be used to call all of the existing senior secured notes at par, senior notes at 103.875, and PIK notes at 105.5 (issued outside the restricted group), on top of distributing a €110m dividend and pay related transaction fees and expenses. The existing €30m super senior RCF due 2018 (undrawn) is also replaced by a similar facility maturing in 2023.
This is a very aggressive move that will lead to an increase in net leverage to 7.3x from 5.5x as of 30 Septem-ber 2017 due to shareholder distribution (including the repayment of the €222m 11% PIK notes due 2020 which were issued outside of the restricted group). Pro forma net leverage is even higher than the 6.9x as of 30 Sep-tember 2014 pro forma of the last dividend recap that occurred in early 2015. As a reminder, Picard was last in the market in February 2015 when it issued €770m to distribute a substantial c. €600m dividend plus repay some debt.
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