Investment firm Vestar Capital Partners is to become a majority shareholder in Agrilink Foods when it completes a US$175m equity investment in the largest manufacturer and marketer of frozen vegetables in the US.
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Rochester, NY-based grower cooperative Pro-Fac Cooperative, the parent of Agrilink, announced the signing of the deal on Friday, under which Pro-Fac will retain a significant minority ownership interest.
Agrilink will use the net proceeds from Vestar’s investment, together with the proceeds from a new credit facility, to retire existing bank indebtedness. Upon closing, Agrilink will enter into a new long-term supply agreement with Pro-Fac and has committed to make certain additional cash payments to Pro-Fac during the next several years. Agrilink and Pro-Fac will operate as independent entities post-closing.
The investment is conditioned upon approval of Pro-Fac’s members, availability of bank financing, consent of holders of Agrilink’s 11 7/8% senior subordinated notes, and other customary conditions and regulatory approvals. The transaction is expected to close this summer.
Agrilink anticipates generating sales in excess of US$1bn for its fiscal year ending 29 June 2002.
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By GlobalDataAgrilink’s current management will continue to run the business under the leadership of CEO Dennis M. Mullen. “We are very pleased about this new relationship with Vestar,” commented Mullen. “The firm is an enabler and a respected financial partner committed to helping Agrilink grow. With this equity infusion, Agrilink will clearly strengthen its competitive position.”
Vestar MD Prakash A. Melwani said: “We are excited to be partnering with Pro-Fac and the Agrilink management team led by Dennis Mullen. Agrilink is a market leader in the frozen food category with strong, recognisable brands including Birds Eye. We anticipate the company will take advantage of its improved financial flexibility to increase investment in marketing and new products, thereby helping it grow meaningfully during the next several years.”
In a separate announcement, Agrilink said that it expects to record a non-cash goodwill impairment charge in its financial statements for the fiscal year ending 29 June 2002.
