KCP cooks up the perfect recipe for TSC Foods

The Leeds office of private equity firm, Key Capital Partners (“KCP”), and Yorkshire Bank have backed the management buy-out of TSC Foods Limited (“TSC”), a leading manufacturer of soups and sauces, in a £24 million deal.

Established in 1991, Scunthorpe-based TSC produces and supplies high quality chilled and frozen sauces, soups, entrées and dressings to the retail and foodservice markets. TSC is a key supplier of private label soups and sauces to major food retailer and is the supplier of choice for soups and sauces to a number of high-profile restaurant and pub chains.

In 2008, TSC entered the branded chilled soup market through its development of the Glorious! fresh soup range. The company now plans to continue the roll-out of this brand across all of the grocery chains.

KCP and Yorkshire Bank have backed five long-serving members of TSC’s management team and new managing director, Jonathan Skofic, in the buy-out of the business from previous managing director, Bill Morran, and fellow shareholders.

KCP has invested £6 million for a majority stake in the business, alongside senior debt facilities of £11 million provided by Yorkshire Bank’s Corporate & Structured Finance team. Exiting shareholders have also rolled over a proportion of their consideration into loan notes and equity in Newco.

The KCP team was led by partner, Peter Armitage, and investment director, Mark Buttler. Armitage commented: “We are delighted to be investing in TSC, a company with a reputation for excellent service, high quality and innovative market-leading products.

“With a talented and experienced management team, supplemented by a new managing director, we are confident that TSC will continue to grow and be in a strong position to take advantage of any upturn in consumer and business confidence over the medium term.”

Peter Smith, director with Yorkshire Bank Corporate & Structured Finance, said: “TSC has seen impressive growth over the past two years through careful control of costs and its policy of developing partnerships with clients. Together with the new managing director, Jonathan Skofic, it is well positioned to further develop the company and seek out new opportunities in the food sector.”

Newly appointed managing director, Jonathan Skofic, has built an impressive career history since starting at Shell in the 1980s. After this, he joined Schroders in an M&A role, prior to undertaking a full-time MBA at Harvard. Jonathan then spent the major part of his career with Cott Beverages, one of the world’s largest non-alcoholic beverage companies and the world’s largest producer of own brand soft drinks for retailers, which he joined in 1994. During his time at Cott, Jonathan worked his way up from UK operations director and UK managing director to managing director for Europe and Asia and, ultimately, vice president, business development international.

Skofic added: “The current market is an extremely difficult one in which to find investors, and in particular those with the foresight to consider investing in the foodservice industry. The team at KCP was prepared to go the extra mile, examine beneath the surface and get into the DNA of what makes TSC tick.

“The company’s existing management team has done a tremendous job in driving TSC to its current, market-leading position. With the support of KCP and Yorkshire Bank, we now have the additional operational and financial support required to move to the next level.”

A team from the Leeds office of Cobbetts LLP, comprising Sean Fitzgerald, Abbie Robinson and Nia Bryan, provided legal advice to KCP. Will Oxley and Jonathan Steed from the Leeds office of Grant Thornton provided financial due diligence advice. Sebastian Chambers and Claire Wring of CIL carried out commercial due diligence, while Paul Quinn and Mike Styles of The Quinn Partnership conducted management due diligence.

Matthew Bryden-Smith and Ashley Haworth at Rickitt Mitchell provided corporate finance advice and deal management to Newco. Jon Close at DWF provided legal advice to the management team, while the vendors received corporate finance advice from Patrick Groarke of Livingstone Partners and legal advice from Steve Trynka at Hull-based Rollitts.

Yorkshire Bank was advised by Dean Gormley of law firm, Halliwells.