Rank Hovis McDougall

unquote.com
12 March 2001

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Rank Hovis McDougall has launched a Â£650m whole business securitisation to partly refinance its Â£1.14bn leveraged buyout, which was completed last year. The deal was originally financed through Â£300m of equity provided by Doughty Hanson & Co with Â£830m of senior debt and Â£245m of mezzanine provided by JP Morgan, Bank of Scotland, Lehman Brothers and Royal Bank of Scotland. JP Morgan underwrote Â£466m of the debt package, while RBS and Lehman Brothers each underwrote Â£251m tranches.

The securitisation transaction incorporates a comprehensive covenant package, which is consistent with existing whole business securitisation. It was lead managed by JP Morgan, which was also bookrunner, and co-managed by RBS, which provided working capital of Â£100m. Part of the debt package was also syndicated to Lloyds TSB, which provided a Â£100m liquidity facility. For the purpose of the transaction, RHM has been divided into two distinct parts; the first, RHM Foodbrands+, will be refinanced through the securitisation, and the second, RHM Food Solutions, will continue to be financed through the bank market. The refinancing package will combine a Â£220m senior bank loan with the Â£650m securitisation facility and will replace existing term loan facilities. The securitisation is based on a secured loan structure and has a fixed and floating charge on the assets of the company. It is divided into five tranches: three investment grade Class A notes rated Baa2 Moodyâ€™s with varying maturities and two sub-investment Class B notes, rated Ba3. The issue was placed with a broad group of UK investors.