Turnaround specialist Sun Capital Partners this month rescued another troubled company knee-deep in debt. This time around Northland Cranberries, a manufacturer of Northland 100% juice cranberry blends and Seneca fruit juice products, is the beneficiary of Sun Capital’s equity infusion, as well as its restructuring prowess.
In addition to a $7 million equity commitment, Sun Capital was also able to persuade Northland’s current bank group to exchange $151 million of outstanding revolving credit for $38.4 million in cash, Northland’s issuance of revised debt obligations in the amount of $25.7 million, and newly issued shares of common stock representing a total of 7.5% of Northland’s fully diluted common shares. Financing for the debt restructuring and for additional working capital was provided by Foothill Capital Corp. in the amount of $20 million in term loan financing and a new $30 million revolving credit facility.
Steven Liff, a vice president at Sun Capital, said Northland Cranberries was in a distressed situation as a result of poor management in the past, as well as the down cycle in the cranberry industry. “They found themselves in an extremely over-leveraged situation, and we worked with the existing bank group to restructure the debt whereby the existing bank group took a haircut,” he said.
Liff added that his firm worked with the bank group for a long time to restructure the company’s balance sheet, and noted that Sun Capital had three weeks to close the deal from the time it signed onto the agreement with the banks.
With the completion of Northland’s equity and debt restructuring Sun Capital plans to aggressively grow the company’s brand name. Winsconsin Rapids, Wis.-based Northland Cranberries anticipates reporting a pre-tax loss of approximately $100 million for fiscal year 2001.