Tegel owner refinances $268 mln of debt, lifts annual sales by 8.8%

Monday 5th October 2015

The parent company of Tegel Foods, New Zealand's largest poultry business, has refinanced $268 million of debt into new three year bank loans, although its chief executive declined to take questions on whether the change would reduce its $35 million of annual finance costs.

Ross Group Holdings refinanced $204 million of bank borrowings, $67.9 million on a mezzanine facility and settled interest rate swap contracts on Aug. 7, after its April 26 balance date, according to the company's annual report. The bank debt had been repayable in one year and the mezzanine facility in two years. It had interest rate swaps covering 63 percent of its senior debt facilities at 4.6 percent annual interest. Interest rates on the company's debt ranged from 7.5 percent to 15 percent in 2015.

Chief executive Phil Hand declined to be interviewed.

The chicken producer is ultimately owned by Asian buyout firm Affinity Equity Partners, which has retained advisers for a possible sale of the business it acquired from Pacific Equity Partners in 2011, reportedly for $600 million.

Revenue at Ross Group rose 8.8 percent to $562.7 million in the 12 months ended April 26 while cost of sales climbed about 6 percent to about $430 million. Pretax earnings rose to $10.8 million from $8.3 million, although it paid $2 million of tax compared with a year-earlier tax benefit of $5.8 million, resulting in a 38 percent drop in net profit to $8.7 million.

Interest costs were little changed at $35 million.

In July, the Australian Financial Review yesterday reported the sale of Ross could fetch A$900 million. Since buying the business in 2011, Affinity has sold property including two long-lease chicken processing plants to buyers, among them Wellington based Caniwi Capital.

The majority of New Zealand's chicken industry is owned by private equity investors after Inghams Enterprises (NZ), the country's second-largest poultry producer, was sold, along with its Australian parent Ingham Enterprises, to TPG for A$880 million in June 2013.

BusinessDesk.co.nz

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