Milling & Baking News - July 27, 2004 - 10

B U S I N E S S

Refco risks seen by Moody's
in B1 and B3 credit ratings
NEW YORK - Moody's Investors Service assigned a B1 rating to $875 million
in bank facilities and a B3 rating to $600
million in 2012 senior subordinate notes
of Refco Group Ltd., L.L.C.
The debt is being raised in connection
with a leveraged buyout of a controlling
stake in Refco by Thomas Lee Partners.
The financial risks posed by the L.B.O.
were the principal factor for the ratings,
which Moody's defines as "speculative"
and "subject to high credit risk."
Pro forma for the buyout, Refco will
have $1.4 billion of debt and $900 million
of equity, though tangible equity will be
negative at the outset of the transaction.
Refco sales and EBITDA in the year
ended May 31 were $1.1 billion and $270
million, respectively.
Refco benefits from the company's
competitive position in exchange-traded
derivatives markets, Moody's said. "Ref-

co has a good position as an important
gateway to many of the world's major
derivatives exchanges," the ratings
agency continued. "The firm should continue to benefit from growth in volume
and types of derivative contracts traded
on the major derivatives exchanges."
At the same time, the company competes with "many better capitalized
firms with more diversified earnings
streams," Moody's said.
Assigned the B1 rating were $75 million in senior secured revolving credit
facility, due 2010, and an $800-million
senior secured term loan, due 2011.
The subordinated notes were rated
B3 because of their subordinate position.
"Also, the notes do not benefit from a
guarantee from Refco's parent company or the pledge of subsidiary stock, although the notes do benefit from a subordinated upstream guarantee from Refco's

Sensus inulin found effective at
low levels; pluses as ingredient
ROOSENDAAL, THE NETHERLANDS
- Sensus, a Dutch ingredient company,
said research it funded demonstrates that
the company's Frutafit inulin "significantly
increases the Bifido-bacterium content in the
human colon at 5 grams intake per day."
Sensus America L.L.C., based in Monmouth Junction, N.J., said the research was
conducted by Dr. Sofia Kolida at the University of Reading School of Food Biosciences
in England. The double blind placebo controlled crossover study research was supervised by Professor Glenn Gibson.
Sensus said such a small dose of inulin had
not been shown in the past to be bifidogenic
(stimulate the growth of healthful bacteria).
"We are particularly pleased with the positive outcome, which further substantiates

the prebiotic activity of Frutafit inulins,"
said Bryan Tungland, vicepresident of scientific and
regulatory affairs at Sensus
America. Prebiotics are components that are fermented
by the natural occurring intestinal bacteria.
Frutafit inulin is a soluble, prebiotic fiber
used in food products, fiber-enriched products that are low in carbohydrates, sugar free
and/or low glycemic index products. The
inulin has been shown to "promote healthy
microflora and immune function in the colon and also have been shown to improve
calcium uptake in the body."
Specific health benefits of inulin, according to Sensus, are improved bowel

Danone may be trying to sell
Jacob's cracker business in U.K.
LONDON - Groupe Danone, the French
dairy, water and food company, has decided to sell its Jacob's biscuit business
in the United Kingdom, according to the
Financial Times. The newspaper said that
the search for a potential buyer was down
to two companies, United Biscuits, the
leader in the U.K. biscuit business, and
Hicks, Muse, Tate & Furst, the U.S.-based
private equity firm that has been active in

10 / Milling & Baking News, July 27, 2004

acquiring food brands in Britain.
Jacob's is a relatively small player in
the U.K. biscuit business, centered on its
cream cracker.
Danone, with its LU biscuit brand,
describes itself as the world's secondlargest biscuit and cereal group. It is the
global leader in dairy products and also in
bottled water. Its global biscuit business
accounted for net sales in a recent year of

unregulated subsidiaries," Moody's said.
Thomas H. Lee Partners in June agreed
to acquire a majority stake in Refco Group
Ltd. L.L.C. The transaction, which values
Refco at approximately $2.25 billion, is
subject to regulatory and other approvals.
Thomas H. Lee Partners is a Boston-based
private equity firm currently managing
$14 billion of capital.
Refco said the new investment would
allow the business to recapitalize its
ownership structure while securing
Refco's long-term strategic direction
under Philip R. Bennett, president and
chief executive officer. As part of the
agreement with Thomas H. Lee Partners,
Refco management would retain a large
ownership stake in the company.
Mr. Bennett said Refco intends to
maintain its current marketing strategy,
management structure, customer relationships and relationship with the exchanges in the 14 countries the company
operates. He said the company's current
strategies have generated 30% annual
growth for the last several years. MBN

movement, lowered blood triglycerides,
enhanced mineral bio-availability, immuno
stimulation and beneficial local colonic effects.
Inulin generally is extracted from chicory
but also may be derived from
beet sugar. Inulin has GRAS
(generally regarded as safe)
status.
Sensus said that functionally, inulin contributes to fat and
sugar reduction, and enhances mouth feel
structure and shelf life in a variety of applications, including bakery, cereals, bars, dairy and
beverages.
Frutafit as an ingredient allows brand
managers and marketers to "differentiate
their products on a health platform," Sensus
said. Sensus said the inulin has been incorporated by Royal Dutch Ahold into a line
of bread varieties in The Netherlands, sold
under the Vitaalbrood Flora brand. MBN

£3,371 million ($6,306 million), which was
23% of Danone's aggregate volume, and
operating income totaled £316 million.
According to the Financial Times, the
Jacobs business may be worth "more
than £200 million" ($380 million). United
Biscuits, itself a privately-held company
owned by a group of investors, including
Nabisco in the U.S., has a leading position with its McVitie's and other major
brands in the U.K. Hicks Muse, which
has Premier Foods as well as Weetabix in
the U.K., also controls the Burton's biscuit
business in Britain. MBN

bakingbusiness.com / world-grain.com

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - July 27, 2004

Table of Contents for the Digital Edition of Milling & Baking News - July 27, 2004