Investment firm Oaktree Capital Management, Los Angeles, says it has entered into an agreement with Diamond Foods Inc., San Francisco, to invest $225 million in the ailing Diamond Foods to help the company shore up its balance sheet, meet funding needs and support growth in its business. Oaktree will provide some relief for the seller of Emerald nuts and Pop Secret popcorn, which was grappling with high debt after discoveries of improper accounting led to the removal of the company's top two executives, earnings restatements and the collapse of a planned acquisition.
The recapitalization will result in a capital structure that supports the company’s long-term strategy as well as its current business plan. The recapitalization will also allow Diamond to further strengthen its leadership position in the walnut industry, continue the growth of its snack business and reduce the amount of existing bank debt. The transactions are expected to close by the end of May 2012.
"Oaktree has an exceptional track record of supporting the growth of leading companies in the consumer sector," says Brian Driscoll, Diamond Foods' president and CEO. "Their expertise and resources will be invaluable as we solidify our market position in the walnut industry and seek to continue to grow our snack brands. In connection with Diamond's thorough review of capital alternatives, the company received interest from a number of top-tier investment firms. We are very pleased with our decision to partner with Oaktree, an experienced investor with an outstanding reputation. Our balance sheet strength will provide a solid foundation from which to build as we position Diamond for the opportunities ahead that can deliver value to our shareholders, our growers and our customers."
The investment by Oaktree, in conjunction with an amended bank credit facility, will provide Diamond with sufficient liquidity to meet its anticipated near-term and long-term funding needs. The agreements provide that if Diamond secures a specified minimum supply of walnuts from the 2012 crop and achieves profitability targets for its nut businesses for a six-month period ending Jan. 31, 2013, all of the warrants will be cancelled and Oaktree may exchange $75 million of the debt for convertible preferred shares.
Source: www.globenewswire.com
Diamond Foods secures $225-million from investment management firm
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