(Bloomberg) -- The private equity owners of Foundation Consumer Healthcare, the company behind popular morning-after pill Plan B One-Step, are in early talks with lenders to explore options that include refinancing debt, according to people with knowledge of the matter.
Foundation’s backers, which include Kelso & Co. and Juggernaut Capital Partners, are seeking to raise as much as $1.5 billion from private credit lenders to refinance the firm’s capital structure, said the people who asked not to be identified as the details are private. That amount would also include money to pay a dividend to the private equity investors, the people added.
Among other options are a sale of Foundation, they said. The firm’s owners explored that possibility last year, potentially seeking a valuation of more than $4 billion, Bloomberg News reported at the time.
A new loan would pay down a private credit facility originated in 2021 by lenders that include Ares Management Corp., Blue Owl Capital Inc. and KKR & Co., according to their respective financial statements. That facility matures in 2027 and has an interest rate 6.25 percentage points above the Secured Overnight Financing Rate, according to a filing.
Conversations are preliminary and a deal may not come to fruition, the people said. Spokespeople for Foundation, Kelso and Juggernaut didn’t reply to requests for comment.
Dividend recapitalizations, where owners of lower-rated companies raise debt in the firm’s name to hand cash to investors, soared in the first half of 2024. They are often employed after a private equity owner unsuccessfully tries to sell a company. Earlier this year, Blackstone Inc. led a refinancing of Park Place Technologies debt with a loan that included dividend funding after the data-center firm’s sponsors abandoned a sale attempt.
Foundation — whose other over-the-counter brands include Breathe Right nasal strips, cold sore treatment Campho-Phenique and Dimetapp children’s cold medicine — generates around $300 million of annual earnings before interest, taxes, depreciation and amortization, according to the people.
Demand for emergency contraceptive pills like Plan B surged in 2022, as customers stocked up after the US Supreme Court struck down the constitutional right to abortion. Pittsburgh-based Foundation bought Plan B One-Step and other emergency contraception brands from Teva Pharmaceutical Industries Ltd. for $675 million in 2017.
--With assistance from Ellen Schneider.
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