Bridgepoint takes £70m out of Pets

Bridgepoint has used its £189 million (€291 million; $377 million) refinancing of its investment in Pets at Home to pay off £20 million of mezzanine debt and pay itself a £70 million dividend.

London-headquartered pan-European midmarket firm Bridgepoint has announced a £189 million refinancing of its ten month-old investment in UK specialist pet product retailer Pets at Home.

Bridgepoint backed a £230 million buyout of the company, which sells a range of pet foods and accessories through 162 UK stores, last July. The Royal Bank of Scotland (RBS) financed the purchase through £90 million of senior debt, £20 million mezzanine debt and £22 million of working capital and capex facilities which could be drawn down to pay for a new store roll out.

Under the new financing, BNP Paribas and RBS have underwritten £189 million of new debt facilities. These include £167 million of senior debt, and retain the existing working capital and capex provisions.

Guy Weldon, the Bridgepoint director in charge of the investment, said in an interview: “Although we’ve increased the total debt, we’ve replaced the expensive mezzanine facility. We found that there was strong demand for the debt – banks view Pets at Home as an attractive credit risk because of its strong growth and specialist nature.”

As well as paying off the mezzanine debt, £70 million of the new loans will be used to pay Bridgepoint a dividend. This represents more than half of the firm’s original £120 million equity investment in the company.

According to a press release, Pets at Home has experienced strong growth over the last year. Its like-for-like sales were 12 percent higher in the year ending March 2005 than the previous year, while EBIDTA has grown 45 percent from £24 million to £34.1 million in the same period.

The company has also opened 12 new stores over the last year, and plans to open a further 17 by the end of the financial year. Weldon said there are plans for a further 60 outlets by 2008.