Post Holdings Inc. on Aug. 2 announced it shifted its private brands business – and much of its debt – into a newly formed company, 8th Avenue Food & Provisions, that Post will share with private equity firm Thomas H. Lee Partners LP (THL).
Post expects to receive $875 million, "fully monetizing the net investment Post has made in its private brands business," a statement said, funded by $250 million from THL and 8th Avenue’s assumption of $625 million of debt. Post will retain 60.5% of the common equity in 8th Avenue and will use its proceeds to reduce its pro forma net leverage ratio to 5.5x.
Sales of the new business were not disclosed, but Post said the unit had net earnings of $77.1 million for the 12 months ended June 30. Post will appoint five of the members of 8th Avenue’s Board of Directors, and THL will appoint one member.
"Post explored a range of structural alternatives for its private brands business," the statement said. Jim Dwyer will continue as president/CEO of 8th Avenue.
The transaction is expected to be completed in October.