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September 18, 2009

UK: Lenders to take control of Burton’s

Wagon Wheels and Jammie Dodgers biscuit maker Burton's Foods is in talks over a deal that will see its lenders become majority stakeholders in the private equity-owned UK firm.

Wagon Wheels and Jammie Dodgers biscuit maker Burton’s Foods is in talks over a deal that will see its lenders become majority stakeholders in the private equity-owned UK firm.

If an agreement is secured, Canadian Imperial Bank of Commerce and Apollo Global Management would take control of Burton’s from private equity firm Duke Street in a debt-for-equity swap.

Duke Street will retain a minority stake in the company, a spokesperson for Burton’s told just-food today (18 September).

CIBC and Apollo provided financing for Duke Street’s GBP220m (US$360m) buy-out of Burton’s in March 2007.

However, it is understood that Duke Street has been negotiating with Burton’s lenders since the company broke its banking covenants, which stipulated certain debt-to-profit ratios.

A spokesperson for the private equity firm declined to comment.

Burton’s spokesperson insisted that the restructuring would improve the company’s balance sheet, providing a “great platform” to develop the business.

“It will result in a significant reduction in the company’s debt and create substantial headroom for future growth. The business will be even stronger financially to capitalise on opportunities in the food sector as they present themselves,” the spokesperson insisted.

Burton’s declined to comment on whether the deal would provide the company with additional investment going forward.

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