Private equity firm Lion Capital is facing another blow to one of its companies, as it buys junior debt in Findus to stave off a forced restructuring by lenders.
Lion, which owns Findus — the frozen foods business — has a Friday deadline to get agreement from lenders to waive covenant requirements, just four days after seeing La Senza fall into administration.
Lion has already signed up its senior debt holders to the deal. But mezzanine lenders, which own GBP 180 million of debt, have been reluctant to give way, though sources say this is on the verge of being resolved.
The company’s loan covenants mean it is only allowed 6.6 times the amount of debt compared to earnings. But Findus has been struggling in the face of higher raw material costs and increased price pressure from retailers, meaning it needs headroom of up to seven times on its GBP 740 million debt pile.
