Foodcorp Buyback Offer Faces Bondholder Rejection, Jyske Says

New Foodcorp Holdings (Pty) Ltd.’s offer to redeem its remaining debt to meet the terms of a takeover of the South African food company is too low and won’t be taken up by most bondholders, according to Jyske Bank A/S.

Foodcorp, which owns brands such as Glenryck canned fish and Nola mayonnaise, offered 101 percent of the face value for its 390 million-euro ($502 million) securities due March 2018, the Johannesburg-based company said in a statement today. Yields on the 8.75 percent debt dropped one basis point, or 0.01 percentage point, to 4.91 percent by 12:49 p.m. in London, pricing the bonds at 110 percent of face value.

“Not many people are going to sell,” Michael Holte Christensen, who helps manage the equivalent of $805 million in global high-yielding corporate debt at Jyske, said by phone from Silkeborg, Denmark today. “We’re not going to sell.”

Rainbow Chicken Ltd., South Africa’s largest chicken producer, paid 1 billion rand ($106 million) for 64.2 percent of Foodcorp on April 29. The deal, supported by a 3.9 billion-rand rights offer underwritten by majority shareholder Remgro Ltd., broadened Rainbow’s range to include products from peanut butter to dog food. A change of control clause related to the bonds forced Foodcorp to make the offer to bondholders.

“While we would hope to be able to buy back at the 101 level, we understand that practically we may not get a high uptake,” Foodcorp Chief Executive Officer Justin Williamson said in an e-mailed response to questions. “It’s a liquidity opportunity for bondholders. It seems our country’s image abroad is not ideal right now. So perhaps a perfect time for some to cash in. Only time will tell.”

South Africa’s rand has declined 2.8 percent against the dollar this week, falling to a four-year low, as renewed labor unrest at platinum mines threatened the nation’s credit rating and economic growth. Its 9.6 percent drop this year is the worst performance of 24 emerging-market currencies tracked by Bloomberg.

Remgro, an investment-holding company of which billionaire Johann Rupert and his family are shareholders, owns a 73.4 percent stake in Rainbow.