Palladium to Take Dividend from Wise Foods After Auction Fails

There’s only a few weeks left until the end of the year and the payout parade continues.

Yesterday, Wise Foods said it had completed a $48 million credit facility to pay a dividend to its shareholders and to refinance existing debt. Wise Foods is owned by Palladium Equity Partners, a New York buyout shop.

The dividend recap comes as Wise Foods apparently couldn’t find a buyer. Earlier this year, Palladium put Wise Foods up for sale. Piper Jaffray was advising. In August, I was told that the auction wasn’t progressing well. Palladium was seeking a high price for Wise but competitive concerns were hampering the process. It looks like the auction failed since Wise Foods has instead opted for a dividend recap.

Wise Foods, of Berwick, Pa., is known for its salty snacks like Cheez Doodles, Wavy Potato Chips, Ridgies, Dipsy Doodles, as well as tortilla chips and pretzels. Palladium acquired Wise Foods in 2000 from Borden. Wise, at the time, had $336 million in revenue. Last month, Palladium did sell Castro Cheese Co. to the Dairy Farms of America.

Separately, TARGUSinfo, which is backed by TA Associates, is launching a $245 million credit facility to fund a dividend to shareholders.

Vienna, Va.-based TARGUSinfo plans to use the facility, along with balance sheet cash, to pay a $231 million distribution to shareholders. TARGUSinfo also plans to redeem about $70 million of preferred stock held by TA, according to Moody’s.

The ratings agency has assigned TARGUSinfo a “B1” first time corporate family rating to the company as well as B2 probability of default for its planned $245 million loan. The rating outlook for TARGUSinfo is stable, Moody’s said.

TARGUSinfo provides data and information services that help retailers, call-center operators, Web-based marketers, and communication service providers identify and verify the qualification and location of their customers. In 2005, TA made a $60 million minority investment in the company. It’s not clear if TA has increased its stake.

The company’s proforma revenues were about $134 million for the period ended Sept. 30, Moody’s said.

Moody’s B1 rating reflects TARGUSinfo’ solid growth prospects and high level of recurring revenues combined with high renewal rates. The company has a “good liquidity position supported by healthy profit margins and solid free cash flow generation prospects,” according to a Dec. 8 report from Moody’s.

But Moody’s rating is also constrained by TARGUSinfo’s “modest overall size/scale” and its concentrated business profile. TARGUSinfo’s debt-to-EBITDA ratio would be in the 4.3x range, Moody’s said. Including a recently signed contract, TARGUSinfo’s adjusted leverage would be about 3.8x, the report said.

Palladium declined comment. TARGUS couldn’t be reached for comment.

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