CH private equity firm PAI Partners will buy R&R Ice Cream from rival Oaktree Capital in a deal financed by a form of debt popular during the credit boom – but controversial because it is relatively high risk – which is now making a comeback in Europe.
A source with knowledge of the matter said Paris-based PAI will pay about €850m (£718.2m) to buy the UK maker of Fab lollies, under an agreement announced yesterday.
The deal will be financed by a €253m five-year Payment-In-Kind Toggle note. So-called PIKs are forms of debt allowing borrowers to pay interest in more debt instead of cash, though they must repay in full when the bonds are due.
R&R, which had 2012 full-year revenues of about €600m and was bought by Oaktree in 2006, said in October it was looking at strategic options that could include a sale.
Rothschild acted as lead adviser to PAI, fielding a team led by its global head of consumer, Akeel Sachak.