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News
Contacts: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Aurora Foods Inc.
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Broadgate Consultants, Inc.
212-232-2222
FOR IMMEDIATE RELEASE
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AURORA FOODS ENTERS INTO AGREEMENT IN PRINCIPLE FOR $200 MILLION
EQUITY INVESTMENT FROM ▇.▇. CHILDS ASSOCIATES, L.P.
NEW EQUITY LINKED TO COMPREHENSIVE FINANCIAL
RESTRUCTURING TO REDUCE DEBT
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St. Louis, July 2, 2003 - Aurora Foods Inc. (NYSE: AOR), a producer and
marketer of leading food brands, announced today that it is undertaking a
comprehensive financial restructuring designed to reduce its outstanding
indebtedness, strengthen its balance sheet and improve its liquidity. As part
of the restructuring, ▇▇▇▇▇▇ has entered into an agreement in principle with
▇.▇. Childs Associates, L.P. (▇.▇. Childs), a Boston-based private equity
investment firm with over $3.4 billion of equity capital under management,
pursuant to which ▇.▇. Childs will make an investment of $200 million for a
65.6% equity interest in the reorganized Company at a transaction value of
approximately $925 million. ▇▇▇▇▇▇ also announced that it has begun
discussions with its bank lenders and bondholders regarding the terms of the
restructuring.
In addition, Aurora launched, with the support of its bank lenders, a
vendor lien program under which the Company is offering vendors the ability to
obtain a junior lien on substantially all of the Company's $1.2 billion in
assets for shipments made on customary terms. The lien would cover all
existing and future trade obligations from participating vendors. JPMorgan
Chase, the Company's agent bank, has also agreed to continue to provide the
Company with up to $30 million in accounts receivable financing.
"Since my arrival last September, we have been focused on two primary
objectives to ensure the future success and growth of Aurora Foods," said ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, the Chairman and interim Chief Executive Officer of the Company.
"Our first objective was to strengthen our financial condition by improving
operations and reducing costs. We have made good progress in this area that
will provide a solid foundation for future growth. The second key objective
was to significantly reduce our balance sheet leverage. To achieve this
objective, we have been proactively pursuing a number of strategic options,
including actively working our divestiture process, evaluating various
restructuring alternatives and, finally, identifying and working with a number
of private equity firms regarding an infusion of new equity capital in the
Company."
"The transaction announced today is the result of these efforts,"
said ▇▇. ▇▇▇▇▇▇▇▇. "We believe that this comprehensive restructuring, combined
with the new equity investment from ▇.▇. Childs, provides the best path for
reducing our balance sheet leverage, optimizing value for all stakeholders,
and leaving ▇▇▇▇▇▇ well positioned for the future."
In connection with the restructuring, ▇▇▇▇▇▇ also announced that it
has elected to defer the $8.8 million interest payment due July 1, 2003 on its
outstanding 8.75% senior subordinated notes. Under the indenture for the 8.75%
senior subordinated notes, there is a 30-day grace period for interest
payments. As part of the restructuring, the Company's bank lenders have agreed
not to exercise any remedies available to them during the grace period.
Under the terms of the agreement in principle, ▇.▇. Childs will
purchase a 65.6% equity stake in Aurora for $200 million and the Company's
existing $400 million in subordinated debt will be converted into a
combination of equity and cash. The investment will be used to reduce the
Company's outstanding bank debt and subordinated debt as well as for working
capital purposes.
"Aurora has made great strides toward improving its operations and
reducing its cost structure, and we believe the proposed restructuring will
leave the Company on a strong financial footing," said ▇▇▇▇ ▇. ▇▇▇▇▇▇,
President and founder of ▇.▇. Childs Associates, L.P. "Aurora has widely
recognized premium brands and strong market share and we look forward to
working with the Company to build on the progress made to date and ensure its
long term success."
The agreement in principle provides that the restructuring will
include the following elements:
o The Company's existing bank lenders will be paid in full, receiving
approximately $458 million in cash and approximately $197 million in
new senior unsecured notes with a ten-year maturity. ▇▇▇▇▇▇ and ▇.▇.
Childs intend to raise approximately $441 million of new bank
financing in connection with the restructuring, including a $50
million revolving credit facility (which is expected to be undrawn
upon the closing of the transactions contemplated by the agreement in
principle).
o The Company's existing accounts receivable sales facility will be
paid down and terminated.
o Holders of the Company's 12% senior unsecured notes due 2006 will
receive new senior unsecured notes in the principal amount of
approximately $29 million and with a ten-year maturity.
o Holders of the Company's outstanding 8.75% and 9.875% senior
subordinated notes due 2008 and 2007, respectively, will receive a
50% recovery on their notes consisting of cash in the aggregate
amount of approximately $110 million and approximately 29.5%
(approximately $90 million) of the post-restructuring common stock.
o Existing common and preferred stockholders will receive approximately
4.9% (approximately $15 million) of the post-restructuring common
stock, and the existing common and preferred shares will be cancelled
in connection with the restructuring.
The agreement in principle contemplates that the transaction with
▇.▇. Childs will be effected through a pre-negotiated bankruptcy
reorganization case. The Company intends to conduct its business in the
ordinary course during the restructuring and believes that the transactions
contemplated by the agreement in principle will not affect its ability to
service its customers or pay its suppliers in full.
Concurrently with the closing of the transactions contemplated by the
agreement in principle, ▇.▇. ▇▇▇▇▇▇ expects that ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ will be
appointed Chief Executive Officer of the Company. ▇▇. ▇▇▇▇▇▇▇▇ is the former
President and Chief Operating Officer of International Home Foods and has more
than 30 years of consumer packaged goods experience with the last 15 years in
the food industry.
The Company also announced that it has retained the firm of ▇▇▇▇▇▇
Buckfire ▇▇▇▇▇ ▇▇▇▇ & Co., LLC as its financial advisor in its restructuring
efforts. Additionally, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ has been appointed to the newly
created position of Chief Restructuring Officer. ▇▇. ▇▇▇▇▇▇▇▇▇ brings over 15
years of successful restructuring experience to ▇▇▇▇▇▇. Finally, the Company
has appointed ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who has over 12 years of food industry
experience, as General Counsel.
The Company has notified the New York Stock Exchange about its plans
to restructure its balance sheet and the terms thereof. As previously
disclosed, the Company does not currently meet certain minimum listing
standards of the Exchange. Consequently, the Company's previously announced
proposal for a reverse stock split is being reevaluated in light of the
overall restructuring.
As of June 30, 2003, the Company had liquidity of approximately $27
million, which was comprised of cash and availability under the accounts
receivable sales facility.
About Aurora Foods Inc.
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Aurora Foods Inc., based in St. Louis, Missouri, is a producer and
marketer of leading food brands, including ▇▇▇▇▇▇ ▇▇▇▇▇(R) baking mixes; Log
Cabin(R), ▇▇▇. ▇▇▇▇▇▇▇▇▇▇▇'▇(R) and Country Kitchen(R) syrups; Lender's(R)
bagels; ▇▇▇ ▇▇ ▇▇▇▇'▇(R) and Mrs. ▇▇▇▇'s(R) frozen seafood; Aunt Jemima(R)
frozen breakfast products; ▇▇▇▇▇▇▇(R) frozen pizza and Chef's Choice(R)
skillet meals. More information about ▇▇▇▇▇▇ may be found on the Company's Web
site at ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
CAUTIONARY NOTE: Statements contained in this press release that are not
historical facts are forward-looking statements as the term is defined in the
Private Securities Litigation Reform Act of 1995. All forward-looking
statements are subject to risks and uncertainties which could cause actual
results to differ from the forward-looking statements contained in this
release and which may affect the Company's prospects in general. For a summary
of such risks and uncertainties, see the Company's periodic reports and other
filings with the Securities and Exchange Commission.
The securities that may be offered in connection with the restructuring have
not been and may not be registered under the Securities Act of 1933 and may
not be offered or sold in the United States absent registration or an
applicable exemption from such registration requirements. This press release
does not constitute an offer to sell or the solicitation of an offer to buy
any of those securities.
The agreement in principle is subject to negotiation and execution of
definitive documentation. No assurance can be given that such documentation
will be executed.
The agreement in principle with ▇.▇. Childs Associates, L.P. is being filed
with the Securities and Exchange Commission on a Current Report on Form 8-K.
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