The Australian government has contributed to a debt refinancing deal at snacks major The Arnott’s Group.
Through Australia’s National Reconstruction Fund Corporation (NRFC), the Tim Tam biscuits maker will get A$45m ($29.9m) as part of its refinancing of $1.75bn in existing debt that matures in 2026
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The NRFC is Australia’s A$15bn investment vehicle targeting areas including low-emissions technologies and “value-add” in agriculture, defence and transport.
The deal with Arnott’s follows the fund’s A$36m debt funding deal with Patties Foods Group to help the pie major “modernise” production.
In a statement announcing the transaction with Arnott’s, the NRFC said the move “supports The Arnott’s Group’s continued investment in manufacturing in Australia as part of the company’s domestic and international growth ambitions”.
It added the “refinancing helps to secure the future of a market-leading food company”.
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By GlobalDataResponding to questions from Just Food on whether Arnott’s Group is facing financial pressure, an Arnott’s spokesperson underlined the government fund is “one of over 150 lenders who participated in the oversubscribed refinancing, and did so on the same commercial terms as all others”.
They added: “The agreement attracts market interest rates, and is not, as has been reported, any form of bail-out.”
The Arnott’s spokesperson also pointed to a recent assessment by S&P, highlighting the agency recently affirmed its credit rating on the group’s debt.
“Arnott’s strong brands and market position will support earnings growth and free cash flow, underpinning its standing in credit markets.”
Arnott’s Group operates five manufacturing plants in Australia, employing more than 2,500 people.
The company has invested over A$300m in local manufacturing over the past four years and plans to invest a similar amount over the coming four years, added the spokesperson.
In a statement, the NRFC said it is “supporting planned future-growth capital expenditure as the company expands production and prepares to take some of its most iconic brands to the global market”.
An NRFC spokesperson added: “We carry out extensive due diligence, including detailed financial due diligence, before making each investment.
“Our investment in Arnott’s is no different. We are confident in the company’s position and in the long-term vision that Arnott’s has put forward to increase production and continue taking its market-leading products to the world.”
