Froneri International, the UK-based ice cream manufacturer behind brands like Häagen-Dazs, has priced a €3.9bn debt package to finance one of the year’s largest shareholder distributions, enabling its private equity co-owner PAI Partners to extend its hold on the business.
The debt raise will fund a roughly €4.4bn ($5.1bn) dividend recapitalisation, paid out to shareholders Nestlé SA and PAI Partners, marking one of the biggest dividend recaps seen so far in 2025, following January’s $4.5bn payout to the PE owners of car battery maker Clarios International.
PAI Partners is reportedly preparing to transfer its 50% stake in Froneri to a continuation fund, a move that would allow the firm to retain exposure to the business for a longer horizon, Bloomberg reported last month. Continuation vehicles have become a favoured mechanism for buyout firms to manage portfolios amid a backlog of unsold assets and sluggish deal activity.
PAI acquired UK-based R&R Ice Cream in 2013 and subsequently merged it with part of Nestlé’s ice cream operations to form Froneri in 2016.
The financing package, arranged by Barclays and UBS Group, includes €2.8bn in loans and €1.1bn in bonds, priced tighter than initial guidance. The €900m leveraged loan was set at 3 percentage points over benchmark with a 99.75 cent dollar price, while the $1.9bn equivalent term loan came at 2.5 percentage points over benchmark, also at 99.75 cents on the dollar. Euro and dollar bond tranches priced to yields of around 4.75% and 6% respectively.
The debt proceeds will be combined with approximately €540m of cash on Froneri’s balance sheet to fund the dividend, according to Moody’s.
In response to the deal, Moody’s downgraded Froneri one notch deeper into speculative-grade territory, citing the substantial increase in leverage to finance the extraordinary dividend.
Meanwhile, US leveraged loan and high-yield bond markets remain active, with June marking the busiest month for new issuance since September 2021, highlighting strong investor appetite for leveraged financings despite broader market uncertainties.
Representatives for PAI, Nestlé, Barclays, Froneri, and UBS declined to comment.
