Bloomberg
Standard & Poor’s (S&P) put the debt of New Foodcorp Holdings on watch yesterday after Rainbow Chicken tabled a takeover offer for the closely held food producer.
“A change in shareholding structure could increase debt at Foodcorp, a company that was already subject to a leveraged buyout in 2005,” the credit rating agency said.
Foodcorp has debt worth e390 million (R4.3 billion) held in 8.75 percent notes due in March 2018. S&P said the bonds could be redeemed on a change of ownership control at the company for equal to 101 percent of face value plus accrued and unpaid interest.
Yields on Foodcorp’s bond dropped 2 basis points to a record low of 6.15 percent by 2pm yesterday.
Rainbow, South Africa’s largest chicken producer, made a R1bn offer to to buy 64.2 percent of Foodcorp last month. The deal will broaden its range to include items from peanut butter to dog food.
Rainbow said it planned to raise R3.9bn in a rights issue fully underwritten by Remgro, which owns a 73.4 percent stake in the chicken firm.
Rainbow fell 0.92 percent to R13.97 on the JSE yesterday.