Picard Tries Bond Market Again, Two Months After Rejection
By Laura Benitez and Irene García Pérez
(Bloomberg) — French food retailer Picard Groupe SAS made
a fresh pitch to sell 1.71 billion euros ($2.04 billion) of
bonds on Monday just two months after abandoning a first attempt
when investors balked at the price.
This time round, the firm has a positive new set of
earnings to show to investors as it also holds out the lure of a
larger portion of higher-yielding subordinated debt.
A last attempt to sell the debt in April foundered on
investors’ suspicions that the company’s sales of frozen foods
were getting a boost from the pandemic that couldn’t be
sustained. Investors also demanded a larger yield given Picard’s
indebtedness and credit ratings five-to-six steps below
investment grade, according to people familiar with the matter
at the time.
“We reflected on some of the feedback we got last time in
terms of the structure, some technical things really, which led
to the pricing that we got at that time, which we didn’t find
attractive, and we tried to address some of those questions and
issues in coming back to market this time,” Lyndon Lea, co-
founder of Picard’s majority owner Lion Capital, said by phone.
With this latest attempt, the firm is offering a minimum
450 million-euro five-year senior secured tranche in the low 4%
yield range, while a floating rate note of the same amount and
maturity is being pitched in the same area. Additionally, a 310
million-euro six-year fixed piece is offered in the high 5%
yield range.
Picard Pulls $2.1 Billion Bond After Balking at Price
Demands
Last time round, investors demanded at least 400 basis
points over Euribor on the biggest part of the offering — a 1.2
billion-euro floating rate note.
The firm helda global investor call today, with virtual
meetings running through tomorrow for its three-part
sustainability linked bond issue.
A spokesperson for Picard didn’t respond to a request for
comment.
Strong Earnings
On Friday, the firm reported a “strong” set of full-year
earnings, with Ebitda surging 27% as sizable revenue growth
outstripped increased operating expenses, Lucror Analytics wrote
in a note today.
“We tried to elaborate a bit more in terms of the bridge
from our Ebitda to what we see as non-Covid impacted Ebitda,”
Lea said. “There were some concerns last time that some of the
funds found it not as clear-cut as they would have liked, so
we’ve worked on that.”
However, convincing investors of the firm’s growth outlook
remains key, Solweig Pierronnet, senior analyst at Spread
Research, said.
“Picard will have to reassure investors on growth prospects
and measures implemented to control operating costs over the
long term as, like all food retailers, we believe that Picard is
at the top of a cycle,” Pierronnet said.
Proceeds of the deal will be used to refinance existing
debt and fund a 274 million-euro dividend to the company’s
owners, including Lion Capital, according to the company’s bond
prospectus.