SunOpta Inc. is leaning on its banks to fund the expansion of its frozen-fruit business after the company pulled a $330 million junk-bond offering.
The company, which is acquiring Sunrise Holdings Inc., canceled plans for the sale, citing "current market conditions," according to a statement Thursday morning. The Brampton, Ontario-based company plans to use the backup financing provided by lenders led by Bank of Montreal, according to an Aug. 3 company filing.
Even as bonds of speculative-grade companies have rallied this week, companies and investors are still treading cautiously as the market looks to rebound from its worst quarterly performance in four years.
SunOpta will pay at least 7 percent on the so-called bridge loan for the first year. If the bridge loan is still outstanding at the end of the year, it will be extended into a seven-year term loan. The second-lien bond offering that was scrapped was being offered at a yield of as much as 10 percent and would have been part of a revival in junk-debt sales, which have ground to a halt since Sept. 25.
Scotts Miracle-Gro, a maker of garden products, sold $400 million of notes Wednesday, ending the seven-day drought in junk-debt sales, according to data compiled by Bloomberg.