GLOBAL private equity giant TPG is seeking to refinance poultry producer Inghams Enterprises, calling lenders to back the deal at three-and-a-half times forecast earnings.
Sources told The Australian Financial Review that Inghams would use the refinancing to take a dividend from the chicken business, only 18 months after acquiring it.
It's understood Inghams is seeking to borrow $665 million which represents a conservative three-and-a-half times forecast earnings before interest, tax, depreciation and amortisation.
While TPG is not expected to float the business in the coming months, investment banks may be tempted to buy into the debt syndicate to get closer to the business.
A lending position is not expected to be attached to an IPO mandate, unlike similar private equity-backed refinancings such as Coates Hire.
TPG pounced on Inghams in March 2013, knocking out rival Blackstone for the family-owned empire.
The business has proved to be a cash cow for TPG with the sale and leaseback of properties within Inghams' real estate portfolio – likely to reap about $500 million – effectively paying back most of the debt. The property sale is tipped to complete next month.
Inghams made normalised earnings of about $190 million in the 2014 financial year on $2.3 billion revenue. It is Australia's largest poultry producer with a market share of approximately 36 per cent.
Elsewhere, British billionaire Joe Lewis has again increased his stake in the Australian Agricultural Company (AACo), with his Tavistock investment group now in command of 26 per cent of the nation's biggest beef producer after its latest creep up the register.
The Bahamas-based Lewis, who also owns English Premier League club Tottenham Hotspur, was the primary backer of AACo's $299 million capital raising last year.
AACo launched the raising to shore up its stretched balance sheet and fund construction of its $91 million Darwin abattoir, which will commence operation any day now. According to a substantial shareholder notice, Tavistock's AA Trust has built its stake from 23 per cent in April to 26 per cent.
