Frozen Food Manufacturer Case Study
How a Covenant Problem Became a Growth Story
A $40 million maker of frozen meatballs and barbequed meats needed capital it could not get from its bank. Two mezzanine raises later, it had a new plant, an acquisition, double the revenue, and the same owners.
mezzanine financing to finish construction of a new plant and consolidate two existing plants into it, raised while the company was in non-compliance with its bank covenants.
Tully & Holland sent books to 54 mezzanine providers and brought three finalists to term sheets. A financing run as a competitive process, not a phone call.
a second, larger mezzanine raise closed 14 months after the first, refinancing existing debt and funding an acquisition that Tully & Holland originated.
our sum of the two stated tranches, all of it into a company with $40 million of annual sales.
the acquired business, a leading maker of frozen dinners and family entrées, had annual sales of $50 million in its own right.
the engagement closed with a single new processing facility and a recapitalized, simplified balance sheet.
- Leading maker of frozen fully-cooked meatballs and barbequed meat products
- Annual sales of $40 million
Stage One Need, Financial Situation/Constraints, and T&H Approach
- FFM was in need of $6.5 million to finalize construction of a new plant, as well as relocation and consolidation of its two existing plants, while in non-compliance with bank covenants
- T&H sent books to 54 mezzanine providers; term sheets from 3 finalists
- T&H obtained $6.5 million of mezzanine financing to complete build-out and consolidation
Stage Two Need, Financial Situation/Constraints, and T&H Approach
- Approximately one year later, FFM was in need of $16.5 million to refinance existing debt and consummate a frozen food acquisition initiated by T&H
- 14 months after Stage One, T&H obtained an additional $16.5 of million mezzanine financing
- Proceeds used to consummate the acquisition of a leading maker of frozen dinners and family entrées with annual sales of $50 million, and to consolidate and refinance existing debt
Results/Solution
- Consolidated two plants into new processing facility
- Doubled revenues via consummation of frozen food acquisition initiated by T&H
- Recapitalized and simplified balance sheet
Text reproduced from the report as published by Tully & Holland. Photograph: U.S. Department of Agriculture, CC BY 2.0, via Wikimedia Commons.
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