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Pacific Equity Partners, ANZ Capital sell Tegel Foods to Affinity Equity Partners in NZ$600 million leveraged buyout
By Gareth Vaughan
ANZ Capital has joined Australian private equity fund Pacific Equity Partners (PEP) in agreeing to sell poultry producer Tegel Foods for just over NZ$600 million to leveraged buyout firm Affinity Equity Partners.
Interest.co.nz understands Affinity's offer is backed by financing from a syndicate of banks including ASB's parent Commonwealth Bank of Australia, Westpac, Macquarie Bank and Rabobank. It's understood this financing will replace Tegel's existing NZ$300 million plus in borrowings in place with ANZ, BOS International, Rabobank and Westpac.
Agreement on the sale of Tegel, which employs 1,550 people, was reached over the summer holiday period and neither PEP, which is selling its 43.1% stake, nor buyer Affinity, have made a formal announcement.
Affinity describes itself as an independently owned Asia-Pacific buyout fund manager run by the former investment professionals of UBS Capital Asia Pacific – the private equity arm of Swiss banking giant UBS AG. It was spun out of UBS Capital Asia Pacific in 2004. The firm's website says it aims to hold companies for four to six years before exiting and that it manages funds and assets worth about US$4 billion. Affinity has offices in Hong Kong, Jakarta, Seoul, Singapore and Sydney.
PEP acquired Tegel late in 2005 from HJ Heinz, in a deal that included management participation, for about NZ$250 million. It subsequently sold a 26.7% stake to ANZ Capital. Other shareholders include Lujeta Pty Ltd and Tegel management.
The latest annual accounts from Tegel's parent company show total comprehensive income for the year to April 25, 2010 of NZ$18.3 million up from NZ$10.2 million the previous year. The profit rose as revenue fell to NZ$401.7 million from NZ$464.3 million and cost of sales dropped to NZ$282.9 million from NZ$340.8 million.
The group coughed up net finance costs of NZ$30.9 million, down from NZ$45.3 million.
As of April 25 last year bank borrowings stood at NZ$230.9 million, a subordinated debt facility was worth NZ$53.7 million and a mezzanine debt facility NZ$34.6 million. That left total interest bearing liabilities at NZ$319.2 million compared with NZ$321.5 million a year earlier.
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