LBO & financial covenants: How lenders took-over the control of Findus group

The case illustrates the acquisition of a group through a leveraged buyout operation (LBO) and its unwanted takeover of the junior bank creditors outcome following covenant breaches.
In 2008, Lion Capital, a British private equity fund, acquired through a LBO Foodvest group (renamed Findus group) previously held by the private equity fund CapVest for a price of more than £ 1.1b. Financing syndication of the LBO is accompanied by traditional banking covenants. In December 2010, the group experiences for the first time a covenant breach. Another covenant breach occurs in March 2011. December 2011 and March 2012 covenant breaches caused the restructuring of the debt of the Findus group and its takeover by the junior creditors.
The case illustrates how changes in the economic environment, funding constraints via financial covenants and the underestimation of financial risks may affect drastically a LBO success.

The case illustrates the following concepts:
      Strategic analysis tools: PESTEL analysis, 5(+1) Porter forces, SWOT analysis
      The financing of an LBO: diversity of securities and financial conditions
      Financial covenants imposed by lenders and the consequences of a covenant breach
      Return on invested capital, capital employed turnover, operating margin
      EBITDA
      Financial ratios
Productivity ratios
      Working capital management
Analysis of cash flows
      Debt renegotiation and takeover from lenders

LBO - Findus - Covenant - Takeover

Master in Corporate Finance, in Financial Engineering, or in Strategy
MBA

Transformation et conservation de poisson, de crustacés et de mollusques

All data is available in excel format to optimize the time spent on the analysis ('Data for students' file in excel format). Calculation is available to the facilitator ('Correction' file in excel format - for teacher use only).
Key points to solve the case study are given in debriefing (51 slides)

Année de la problématique : 2011

Livraison : Livraison par lien de téléchargement

Nombre de pages : 52 avec 20 page(s) annexe(s)

Temps d'utilisation : plus de 3 heures (3-6 hours, depending on the learning scenario chosen)

Code du secteur d'activité : 05 - Pêche, aquaculture, services annexes