Findus Eyes New Debt After Horsemeat Crisis

The frozen food company at the centre of Europe’s horsemeat scandal is plotting its first foray into the financing markets since it was forced to withdraw thousands of products from retailers’ shelves earlier this year.

Sky News has learnt that Findus, one of the most prominent names in British supermarkets, is this week expected to launch a £410m bond that will provide the company with greater long-term financial stability.

The deal, which is being assembled by Goldman Sachs (NYSE: GS-PB - news) and JP Morgan (Other OTC: JPXSZ - news) , the investment banks, will be the first significant move to improve Findus’s balance sheet since the crisis which exposed some of its beef-labelled products as containing close to 100% horsemeat.

The scandal led to some of its lasagne ready-meals and other products being removed from sale, and added Findus’s name to the list of companies – which included Tesco (Other OTC: TSCDY - news) and Asda – caught up in the controversy.

A source close to Findus insisted that no formal decision had been taken to launch the bond and that it would only do so on attractive terms.

No dividend would be taken by the company’s shareholders as a result of the refinancing, they added.

The bond deal would replace Findus’s existing debt, which was put in place as part of a financial restructuring last year, and which expires in several tranches between 2015 and 2016.

The frozen food group is majority-owned by JP Morgan and Highbridge Capital, a hedge fund, while Lion Capital, a private equity firm, owns a minority shareholding.

Lyndon Lea, a founder of Lion, questioned Findus’s response to the horsemeat scandal in an interview with Sky News in February.

"I am enormously frustrated, yes. In any Lion-controlled investment we would not have handled the PR in the manner it has been handled by Findus," he said at the time.

"We believe in the investment, we believe it is a good business, and we wouldn't look to any quick sale of our stake. It does, though, give me pause for thought about ever putting myself in a minority [investment] position again."

Findus was supplied by a company based in northeastern France called Comigel, which makes similar products for food suppliers and retailers in 16 countries.

The Findus products revealed to contain horsemeat in the UK came from a Comigel factory in Luxembourg.

The crisis prompted a wide-ranging debate over food sourcing and labelling across Europe, although firm action to prevent a recurrence has been largely elusive.

Last week, Birds Eye, the rival frozen food producer, said it would use only beef sourced from farms in the UK and Ireland (Other OTC: IRLD - news) .

A Findus insider pointed out that sales of meat-based ready meals accounted for only about £12m of its roughly-£1bn annual turnover.

A refinancing would enable the company to “focus on extending leading market positions, growing its well established and trusted brands and private label business,” he said.

Findus declined to comment.