Europe's largest vending machine operator Selecta has swapped €770m (£615m) of debt to a lower lending rate in a bid to lessen the financial woes of the struggling business.
The firm, which runs vending machines across the UK, has sold €550m of high yield bonds to a variety of unnamed institutions, it confirmed yesterday.
A €220m payment in kind (PIK) note has also been sold to the fund management division of US private equity firm KKR.
Falling revenues and shrinking cash flows have forced the company’s backer Allianz Capital Partners to overhaul the company’s balance sheet ahead of a planned expansion designed to boost growth.
“We are confident that based on the strategic initiatives and efficiency measures implemented over the past 18 months Selecta is well positioned to further strengthen its leading market position,” Allianz Capital managing director Joerg Spanier.
The B+ rated bonds, which are senior secured issues, have been sold in two tranches with a yield of 6.5 per cent, a relatively low rate given the higher level of risk they will default.
KKR has bought the seven-year PIK note as a junior unsecured note and the buyout shop will also have the right to receive a substantial equity portion of Selecta when Allianz eventually exits the company.
Selecta chief executive Remo Brunschwiler said the refinancing would help it focus on new products like a recent tie-up with Starbucks to roll out branded coffee vending machines in offices across the UK.
Selecta, which has operations in 21 countries, including the UK, France, Switzerland, and Germany employs about 4,500 people.
One of its rivals, Autobar Vending Services, has also fallen on hard times due to a shift in consumer tastes away from vending machines.
Autobar was sold by its private equity owner CVC Capital Partners and turned control of the business over toe lenders earlier this month.