Hain Celestial’s sale of its international business, including the likes of Ella’s Kitchen and New Covent Garden, is hanging in the balance after the US food group failed to secure an amendment to a credit agreement with its lenders.
The $323m (£240m) deal with investment firm Aurelius, agreed in September, is conditional on Hain extending the maturity date on the lending facility into 2027.
Aurelius can terminate the sale following Hain being unsuccessful in obtaining the amendment within 30 days of the deal agreement being signed.
Hain today revealed, alongside its first-quarter results, that it had received the final required regulatory approvals needed for the sale of the international division, but had not been able to amend its credit agreement with lenders by the required date of 12 October.
The group said it remains in discussions with Aurelius and continues to “pursue a path forward” to complete the transaction.
“Receiving the final required regulatory approvals is an important step toward completing the sale of our international business,” said CEO Alison Lewis.
“We remain in discussions with our lenders regarding our capital structure and with Aurelius regarding a path forward for the transaction. If completed, the international sale would allow us to reduce debt and create a more focused North America business with strong brands in attractive categories. We will provide updates as material developments occur.”
Aurelius declined to comment on the deal.
The divestment of the international business, which includes the Hain Daniels UK business and household brands such as Ella’s Kitchen, Linda McCartney, Yorkshire Provender, Hartley’s and Sun-Pat, is part of a long-running turnaround plan at the struggling US group.
Revenues slipped a further 7% to $260m (£192m) on an organic basis in the first quarter to 30 September as volumes across the group declined. Net losses reduced from $21m (£15m) a year ago to $11m, while adjusted EBITDA dipped from $20m to $18m.
Organic revenues at the international division also fell by 7% to $149m (£110m) as growth in baby & kids and beverages failed to offset lower soup sales. Adjusted EBITDA in the division stood at $9m, compared with $23m in Q1 last year.
“During the first quarter, we made progress on our strategic actions to realign our cost structure, drive productivity, and improve our commercial and innovation capabilities,” Lewis said.
“We saw our gross margin improve meaningfully year over year, reflecting progress on both our commercial and portfolio actions. We remain focused on simplifying our operating model and creating a stronger go-forward Hain.”
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