Dairy Crest announced this morning (18 April) it is using some of the cash raised by the sale of its French business St Hubert to revise its capital structure and inject funds into its pension scheme.

The company had originally intended to use the funds for M&A. However, the group has struggled to find appealing takeover targets in the UK dairy aisle.

Dairy Crest said it would therefore use cash to revise its capital structure, including the early repayment of GBP100m (US$152.7m) loan notes, with an exceptional cost of GBP8.8m. The company also revised its revolving credit facility by GBP51m to GBP247m.

Additionally, the group has made a one-off GBP40m cash contribution to its pension fund in addition to the ongoing annual payments of GBP20m. It has also provided the trustee of the fund with a floating charge over its maturing cheese inventories worth up to GBP60m.

“Following the successful sale of St Hubert, we have now restructured our balance sheet, putting in place a more appropriate capital structure. This will reduce interest costs going forward and underpin the dividend and still gives us scope to invest to grow the business,” CEO Mark Allen said.