Campofrio Says $27 Million Savings Attainable in RefinancingKatie Linsell
Campofrio Food Group SA, the Spanish sausage maker which is being acquired, says it expects to save as much as 20 million euros ($27 million) in annual interest costs after a proposed bond refinancing.
Europe’s largest producer of processed meat products is in talks with its banks to exchange 500 million euros of notes for new debt, Luis Montesinos, the company’s treasurer, said in an interview in Madrid. The company is looking to the end of October, although any decision will depend on market conditions, he said.
The loss-making company was upgraded by Standard & Poor’s last month after it agreed to be bought by Sigma Alimentos SA, a unit of Mexican conglomerate Alfa SAB, in partnership with Hong Kong-based pork producer WH Group Ltd. Campofrio is now ranked BB-, three steps below investment grade.
“We have a big opportunity to significantly reduce our debt costs,” Montesinos said. “We could already make a cost saving now by refinancing but we prefer to wait until the acquisition completes and Sigma takes control.”
The company can redeem the 8.25 percent notes at 102.06 cents from Oct. 31, according to the bond’s terms. They are quoted today at 104.23 cents, Bloomberg data show
Campofrio reported a 4.5 million-euro loss in the first quarter compared with a 4.1 million-euro loss in the same period a year earlier, according to a May 14 filing. Earnings before interest, tax, depreciation and amortization were 28 million euros, up from 25 million euros a year before.
The takeover offer won approval from the Chinese trade ministry last month and Spain’s stock market regulator authorized it yesterday.