By Robert Sherwood
Feb 29 (IFR) - Pinnacle Foods Group mandated Barclays Capital and Bank of America Merrill Lynch to lead its initial public offering, according to two sources familiar with the process. The company is expected to use proceeds from the offering to repay debt, with private-equity owner Blackstone Group selling down its ownership stake in subsequent sales, according to the sources.
The offering, which has been rumored but not filed with securities regulators, is tentatively sized at US$400m-$500m.
Blackstone acquired Pinnacle Foods for US$2.2bn in a leveraged buyout in 2007. The private-equity firm took on additional debt to help fund the purchase of Birds Eye Foods for US$1.3bn in 2009. Barclays and Bank of America both advised Pinnacle on the Birds Eye purchase.
Pinnacle Foods had long-term debt obligations of US$2.79bn as of September 30. That equates to 6.3-times leverage for the US$442m of adjusted Ebitda over the trailing twelve months. The IPO would reduce leverage to roughly 4.5 times at the targeted size.
Robert Sherwood is an IFR reporter in New York; editing by Stephen Lacey and Amy Resnick