Foodcorp attracts major investors

2010/03/10

Foodcorp, South Africa’s third largest food company, has successfully concluded a major shareholder restructuring with new investments by BlueBay Asset Management plc (“BlueBay”), a UK based fund manager and Capitau SA Partnership (“Capitau”), a South African private equity investor that also acted as lead transaction advisor. These investments have enabled Pamodzi Investment Holdings (Pty) Ltd (“Pamodzi”) and former members of management to monetise their approximate 77% holding in Foodcorp.

BlueBay’s R495.51m and Capitau’s R30m investments see them entitled to shareholdings of 44.44% and 4.56% respectively. Management and staff have invested an additional R111.92m to increase their stake in the business to 51%, thus giving them control of the company. A newly formed holding company called New Foodcorp Holdings (Pty) Ltd (“Foodcorp Holdings”) will hold 100% of the shares of Foodcorp going forward.

At the same time, Foodcorp purchased the minority interests in First Lifestyle Group (Pty) Ltd, the perishable food products business acquired in 2007, and resulting in a fully streamlined ownership structure.

Justin Williamson, Group CEO of Foodcorp, commented: “This transaction has many positives for Foodcorp at an operational level as it achieves several important objectives, including a simplified group structure, greater alignment of management and shareholder interests and streamlined decision-making.

“Pamodzi and certain former members of management had been looking to realise their investment in Foodcorp, and the transaction fully meets this objective. At the same time, current management had been looking to increase its ownership, and this transaction now provides management and the Share Trust with 51% equity control of the business. “Today, I don’t believe there are many companies of our size in South Africa where 3000 staff own 23% of the business with 86% of the benefits flowing to previously disadvantaged persons.”

The focus of the company is now exclusively on creating long term value by expanding revenues and growing margins but also on de-leveraging the business. For the year to 31 August 2009, revenues exceeded R6.3bn with trading EBITDA of R645m, reflecting a growth of over 10% year-on-year.

Anthony Robertson from BlueBay said: “We are delighted to be investing in Foodcorp and very excited about the prospects of the business. We are looking forward to a long standing strategic commitment with our new partners.”

Delisted from the JSE Limited in 1998, Foodcorp was the first SA corporate to refinance its business by raising €175m at 8,875% in the European high yield market in 2005. It did so again in 2007, when it acquired First Lifestyle by tapping the high yield market to raise a further €135m. Today, net debt of the company stands at around R2.7bn with its high yield European bond coming to maturity in June 2012.

Foodcorp comprises a group of businesses involved in the production, marketing and distribution of food. The group’s product basket ranges from raw materials and staples to some of South Africa’s best-known brands, including Nola mayonnaise, Yum Yum Peanut Butter, Ouma rusks, Mageu No. One, Glenryck pilchards, Piemans pies, Seemanns meats and the Bobtail & Dogmor dog food brands.

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