Exclusive: Birds Eye Owner Revives Payout

The owner of the Birds Eye frozen food brand is plotting to revive a controversial deal that could result in it pocketing a windfall worth hundreds of millions of pounds.

I have learned that Permira, one of Europe's biggest buyout firms, has begun discussing with banks in recent days a refinancing of Iglo Group's £1bn-plus debt burden.

Permira dropped a previous plan for Iglo in July amid opposition from the frozen food company's lenders and because of what it described as the unattractive terms on offer.

However, the recent recovery in the debt markets, which bankers say are "red hot", has prompted Permira to look again at the potential for a substantial payout.

Sources close to the private equity group, which also owns stakes in companies such as the AA, the breakdown recovery service, and All3Media, the television producer, said that no decisions had been taken about a refinancing.

Banks have not yet been appointed to work on a deal, indicating that Permira's deliberations are at an early stage, although Credit Suisse, which tried to auction Iglo earlier this year, is likely to play a role.

Refinancing deals such as these can be contentious because they can enrich company owners while increasing the debts owed by businesses, which can have disastrous consequences in the event that trading downturns mean the borrowings cannot be repaid.

A refinancing could involve reorganising the terms of Iglo's debt without paying Permira a new dividend, insiders said.

Iglo, which has operations across Europe and is run by Martin Glenn, one of Britain's most experienced food industry executives, has performed strongly since Birds Eye was acquired by Permira from Unilever in 2006.

Last month, the company announced a near 13% increase in first half earnings to about £150m.

Permira and Iglo Group both declined to comment.