Bakkavor in the midst of management reshuffle

Bakkavor Group, the United Kingdom based ready-to-eat meal provider, on 25 January 2016 seeded 89% ownership control to Bakk AL Holdings Limited, a company owned by founders Agust and Lydur Gudmundsson and external fund managed by The Baupost Group, L.L.C. The deal as per company press release was valued at GBP 163m. Agust and Lydur Gudmundsson, who own a controlling interest in Bakk AL Holdings Limited, will remain in their current roles as CEO and Chairman in Bakkavor.

The company in 9M15 had registered a top-line growth of 2.8% YoY to GBP 1.3bn, largely supported by 42% YoY rise in its International business. In 9M15, Bakkavor’s international business added GBP 34m to the top-line, which also compensated for the flat growth on the company’s home turf. During the same period, like-for-like sales were up 1.7% YoY to GBP 1.2bn. Furthermore above growth coupled with cost-of-sale being contained around 70% of topline helped adj. EBITDA rise by 11.5% YoY to GBP 95.7m in 9M15. Following this net debt also declined 8.9% in 9M15 to GBP 430m as compared to GBP 472m in FY14, due to early repayment of GBP 140m of its existing 8.25% sr. secured notes due 2018. Corresponding net leverage also improved to 3.3x in 9M15 vs 3.9x at FY14.

Recent events:

  • On 28 January 2016, announced that it is to redeem GBP 75m at a price of 102.0625% of its sr. secured noted due 2018 of which GBP 191m remain outstanding. The notes will be redeemed on 29 February 2016 and will be funded through existing cash on its balance sheet.
  • Remaining 60% stake sale in Italpizza S.r.l to Dreamfood S.r.l for cash consideration of GBP 22m was completed on 14 July 2015.
  • Acquisition of B.Robert’s Foods in the US was completed on 12 January 2015, for a cash consideration of GBP 19.6m.


Earlier in April 2015, Bakkavor had successfully increased availability under its banking facilities GBP 220m from GBP 80m, while maturity was extended to February 2018 from October 2016. As mentioned above the company used availability under banking facility for early redemption of GBP 140m under its sr.secured notes due 2018. In addition to this, Bakkavor’s receivables securitization facility was also extended upto February 2018.

FCF improved 1.1x to GBP 65m in 9M15, as capex spend reduced 26.6% YoY and also helped by improvement in adj. EBITDA and better working capital management. At 9M15-end, total liquidity stood at GBP 145m, which included GBP 65m in cash and cash equivalent and c. GBP 80m available under its banking facilities. The current liquidity position with positive FCF generation looks sufficient to cover short-term borrowings of GBP 14.7m. However post the redemption of GBP 75m on it 2018s senior secured notes total liquidity will drop to c. GBP 70m at 1Q16-end .

During the nine months ended 30 September 2015, Bakkavor employed 18,000 individual globally and produced over 5,000 products in 18 different categories. The company’s top customers included Tesco, Marks & Spencer, Sainsbury’s, Waitrose, Asda and Morrison’s.

Categories: Earnings, European Earnings, General News

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