Home » Diamond Foods Gets New CEO, $225 Million Infusion
Diamond Foods Gets New CEO, $225 Million Infusion
Diamond Foods in early May hired former Hostess CEO Brian Driscoll. One of his first acts was to engineer a $225 million cash infusion from Oaktree Capital Management L.P., which could lead to the investment firm acquiring a 16.4 percent of the publicly traded company.
The cash will recapitalize the San Francisco company’s balance sheet, “strengthen the company's leadership position in the walnut industry, continue the growth of its snack business and reduce the amount of existing bank debt,” company statements said.
The Oaktree investment initially consists of $225 million of newly issued senior notes and warrants to purchase approximately 4.4 million shares of Diamond common stock, a Diamond statement said. The senior notes will mature in 2020 and will bear interest at 12 percent per year that may be paid-in-kind at Diamond's option for the first two years. Oaktree's warrants will be exercisable at $10 per share and would constitute a fully diluted ownership level of approximately 16.4 percent of Diamond Foods.
The agreements provide other means of repayment if Diamond meets financial targets. Matthew Wilson, a managing director of Oaktree, and Dean Hollis, a senior advisor to Oaktree and former president and COO of ConAgra Foods, will join Diamond's board of directors.
In February, Diamond Foods fired its CEO and its chief financial officer and restated two years of financial results after an internal probe found accounting irregularities. Director Rick Wolford – formerly chairman, pres. & CEO of Del Monte Foods -- was named interim CEO.
He was replaced May 8 by Driscoll. The new CEO has a 30-plus year career with leading food and consumer businesses such as Kraft, Nabisco, Nestlé and Procter & Gamble. In June 2010, he became CEO of Hostess Brands, but left in March of this year shortly after Hostess filed for bankruptcy protection for the second time in eight years.
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