* Payout part of $425M recapitalization
* Diet company's outlook stable
* Turnaround looks complete
By Steve Bills
NEW YORK, March 19 (Reuters-BUYOUTS) - Atkins Nutritionals,
a once-desperate turnaround story, has recovered enough of its
financial health to support a $425 million recapitalization.
Sister service Thomson Reuters Loan Pricing Corp reported that
the $425 million bank loan would be used to refinance existing
debt and pay a dividend to shareholders.
Moody's Investors Service Inc put the dividend at $118
million, giving a realization to owner Roark Capital Group just
more than two years after the Atlanta-based buyout shop paid
$301 million in December 2010 to acquire the diet company from
its previous backer, North Castle Partners.
The Atkins transaction won North Castle the 'Turnaround Deal
of the Year' award from Buyouts Magazine in April 2011. Ezra S.
Field, a managing director at Roark Capital, said the firm's
financial performance today is strong. "We're bringing new
customers into the brand and retaining existing customers."
Moody's assigned a 'B2' corporate family rating and a stable
ratings outlook to the company formally known as Atkins
Nutritionals Holdings II Inc. In Moody's scoring system, a 'B'
rating is speculative for companies that are subject to high
The rating reflects the company's high leverage, with pro
forma debt/EBITDA of about 6.5x for the fiscal year ended
December 31, 2012, Moody's said. Atkins has "significant
distribution channel concentration, and small scale relative to
its competitors," the credit rating agency said, but the company
has a growing market niche, strong brand recognition and good
The current stability of the Atkins brand marks a reversal
from 2007, when North Castle bought the company from its
post-bankruptcy lenders. From a peak of $700 million in revenue
and $200 million of EBITDA in 2003, when founder Robert Atkins
died from head injuries following a fall on an icy New York
sidewalk, Atkins had fallen to $110 million in trailing revenue
and $14 million in EBITDA by the time North Castle bought the
company. North Castle ultimately generated a 5x return on its
invested capital, making the deal its best exit to date.
Field declined to discuss Roark Capital's plans for the
company, except to say that the firm has no current plans to
exit the investment. The firm continues to see opportunities for
the portfolio company, Field said. "The number of Americans who
are materially overweight or obese and need to diet to lose
weight is large and growing, no pun intended."
Credit Suisse leads the loan financing deal, LPC reported.