Australia’s Real Pet Food taps investors for equity injection

A company spokesperson told Debtwire, AVCJ’s sister publication, of the equity injection. They added that Real Pet Food’s “debt facilities are much lower today and a refinancing will likely commence later this year.” Facilities amounting to AUD 475m and due in 2024 have been partially paid down, but no details were given as to the size of the remaining loans.

Hosen, New Hope, and Temasek acquired Real Pet Food from Quadrant Private Equity in 2017 at a valuation of AUD 1bn. The founders retained a minority interest. Quadrant paid AUD 410m for a majority stake in the company – then known as VIP Petfoods – in 2015.

The 2017 deal was supported by a facility underwritten by China Merchant’s Bank. Two years later, HPS and HSBC provided a AUD 435m unitranche loan and a AUD 40m revolver that took out the China Merchant’s Bank facility, Debtwire reported.

As of year-end 2021, the HPS and HSBC facilities had AUD 288.5m outstanding. Around the same time, Real Pet Food breached a covenant on the unitranche loan requiring that the leverage level not exceed 6.25x. In April 2022, the company negotiated an amendment to the facilities and secured a waiver.

The spokesperson said that Real Pet Food is now in compliance with its loan covenants after seeking waivers last year following supply chain disruptions caused by COVID-19.

Following the covenant breach, Real Pet Food engaged Deloitte to monitor and provide lenders periodic independent business reviews detailing the company’s financial performance and cash flows, said a second source familiar and the source with knowledge of the matter. The Real Pet Food spokesperson said Deloitte was in fact helping prepare a revised financial model and a future capital expenditure plan.

The company was founded in 1994 by the Quinn family who had previously owned a similar business in New Zealand. It distributes globally – through grocery, pet speciality, and e-commerce channels – operating under brands such as Nature’s Gift, Farmers Market, Nature’s Goodness, and Jimbos. It has operating businesses in Australia, New Zealand, China and the UK.

Hosen, New Hope, and Temasek intended to drive growth in Australia and New Zealand and accelerate international expansion. China-based Hosen specialises in food and agriculture, while agribusiness conglomerate New Hope and Temasek are longstanding backers of the GP.

Real Pet Food’s parent entity, Topco Investments Australia, reported a total comprehensive loss of AUD 27.62m for the 12 months ended June 2021 compared to a comprehensive income of AUD 145.7m the previous year. Revenue dropped 21.4% year-on-year to AUD 489.9m. The company reported total borrowings of AUD 346.8m against cash and equivalents of AUD 26.09m as of December 2021.

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• Topics
• Australasia
• Financing
• Buyouts
• Consumer
• Australia
• China
• Hosen Capital
• Temasek Holdings
• Leveraged finance