Spanish Bakery Giant In Trouble

Creditor banks are preparing to take a controlling interest in Spanish baking giant Panrico after its owner, capital risk group Apax Partners, failed in a bid to refinance the company’s debts.

Apax had been given until the end of June to renegotiate loans or try to find a buyer for the company. It bought Panrico at the height of the market in 2005 for nearly €900 million, for which it put on the table some €200 million.

As well known in Spain for its Donuts brand as its sliced bread, Panrico, like other brand name bakers, has been hit severely by consumers down trading to retailers’ own brands during the economic crisis.

UK-based Apax, whose investment portfolio in Spain has ranged from telecoms company Jazztel to online travel agency eDreams and budget airline Vueling, is understood to have held negotiations with several potential buyers for the bakery group.

Both Permira and Doughty Hanson were among those named, but none of the talks resulted in a bid that met the expectations of the banks, led by ING and the two major Spanish savings banks Caja Madrid and La Caixa.

After buying Panrico from the founding family Costafreda and La Caixa, Apax sold off foreign subsidiaries in China and Greece and closed several plants in Spain.

Analysts expect the company to retain a minority stake in Panrico once the new ownership shareout is agreed, which could be by mid August.

The debt levels on the baking group, which reportedly stood at €560 million at the start of the crisis in 2008, are now believed to have soared to nearly €900 million.