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RLPC-Iglo considers high-yield bond market for dividend payment

By Claire Ruckin

LONDON, Oct 5 (Reuters) - Private equity group Permira

is considering raising additional debt for its Birds Eye food group Iglo to pay itself a dividend, by tapping the high-yield bond market for the first time, banking sources said on Friday.

Credit Suisse is advising on the deal and Permira is looking at options to take a dividend by raising around 250 million euros ($326.5 million) of senior secured notes via the high-yield bond market, as well as using some cash from the balance sheet, banking sources said.

Leverage on the company would rise to just under 5 times from a current level of around 3.8 times, bankers added.

In addition, the company will ask its lenders for consent to extend Europe's largest frozen food group's existing debt pile of around 1.4 billion euro by pushing out the maturity on its term loans by three years, bankers said, adding that interest on the debt could also be increased.

Permira declined to comment.

Permira had lined up a dividend recapitalisation with Credit Suisse and Deutsche Bank just days after rejecting a 2.5 billion euro joint bid for the company from Blackstone and BC Partners, as interest fell short of its 2.8 billion euro price tag.

It decided not to pursue the dividend, though, after it couldn't reach the level of payout it wanted, loan investors said. At the time it was expected that any dividend would push leverage up to around 5.5 times.

Conditions to raise the dividend are now more promising, as there is more liquidity in the market and the high-yield bond market re-opened in September after a long lull, bankers said.

"Valuations and leverage previously were too aggressive, but this time the deal seems more measured and market conditions are hotter now. It is a good, well-performing business and investors will want to stay in the deal," a banker said.

Permira bought Iglo from Unilever in 2006 for 1.73 billion euros, backed by around 1.5 billion euros of leveraged loans. The private-equity firm bought the remaining part of Unilever's European frozen food business Findus Italy in 2010 for 805 million euros. ($1 = 0.7657 euros)

(Reporting by Claire Ruckin; Editing by David Holmes)

((claire.ruckin@thomsonreuters.com)(+44)(0)(207 542 1891)(Reuters Messaging: claire.ruckin.thomsonreuters.com@reuters.net))

Keywords: IGLO LOANS/