Hostess Brands LLC may have shelved plans for a sale but its investors will be getting back more than they put in after a little more than two years.
The maker of Twinkies and Ding Dongs is lining up a $1.325 billion loan to back a dividend recap, Thomson Reuters Loan Pricing Corp. said.
Hostess plans to use the proceeds to fund a $905 million dividend to existing shareholders, refinance $344 million in debt as well as pay fees and expenses, Standard & Poor’s Ratings Services said. Hostess can support the “substantially higher debt leverage resulting from the proposed financing because of its demonstrated ability to grow its revenue, EBITDA, and overall cash flows since its relaunch of the business during July 2013,” S&P said.
Kansas City-based Hostess is a U.S. baking company whose brands include Ho Hos, Suzy Q’s and Zingers. Apollo Global Management LLC and investor C. Dean Metropoulos acquired Hostess in 2013 out of bankruptcy. The $905 million dividend is more than twice what Apollo and Metropoulos paid, $410 million, two years ago.
The dividend is the first for Hostess since its sale to Apollo and Metropoulos. Last year, Hostess failed to secure lender approval to pay out a $175 million dividend from its balance sheet, Debtwire reported.
Hostess has been up for sale and has snubbed offers in recent weeks from other companies and private equity firms that valued it at between $2.4 billion and $2.5 billion, including debt, Reuters said. Hostess has decided not to pursue a sale but instead will go public, Reuters said.
Executives for Apollo declined comment. Hostess and Metropoulos could not immediately be reached for comment.
Photo courtesy of Reuters/Jim Young