How a Leader in Consumer Packaged Goods Saved Millions with City National Bank

Situational Overview

Debt service isn’t black and white
Heartland Food Products Group is a global leader in the consumer packaged goods industry, manufacturing the No. 1 sugar alternative in the world, Splenda®. When Heartland wanted to lower their overall debt cost through refinancing, the City National Bank Food & Beverage team stepped in with a creative solution that saved the company millions per year.

Client Goals

A sweet deal
As part of Heartland’s prior debt restructuring strategy, the company held subordinated debt with relatively high fixed-rate interest. Eyeing an opportunity in 2020 to continue the reduction of overall debt cost while keeping new amortization payments at the same level, City National was quick to proactively propose and ultimately close as Lead Agent on a new refinance solution.

The company's strong performance, associated free cash flow and focus on debt repayment was what allowed City National Bank to propose a refinance strategy. Therefore, the team was able to incorporate an all-senior facility of $530 million in total. By repaying the sub-debt, City National was able to significantly decrease Heartland’s cost of capital, while keeping its amortization payments the same.

Heartland jumped at the deal, and as a result of City National’s out-of-thebox approach, Heartland has saved more than $15 million per year in interest costs. The new loan structure also preserved the company’s maximum cash flow flexibility by keeping its minimum payments at the same level.

Less than a year later, the City National team brought to Heartland an idea to tweak the structure based on an expansion in the scope of the company’s operations. As a result, the team worked with its unique lending partners to amend Heartland’s credit facility, lowering overall interest again, and saving the company an additional few million dollars over the life of the loan.

City National’s Approach

Thinking outside the banking box
When corporations grow as successfully as Heartland has, they often outgrow their banking relationships — especially when their banks don't have the resources or expertise to scale with them.

• Companies who seek creative solutions can rely on City National to be:
  Focused. Heartland received personalized attention throughout the refinancing process. City National was immersed in its business — staying on top of industry news and changes to provide sound, strategic solutions.
• Creative. As with Heartland’s new credit facilities, flexible solutions tailored to variables like cash flow, assets, goals and specific timelines are City National’s specialty. And we have the expertise and resources to transform those solutions into realities.
• Nimble. We’re able to scale along with rapidly growing clients like Heartland. Thanks to invaluable relationships with other institutions, City National can help execute complex deals that usually are only possible at larger banks.
• Multifaceted. City National delivers the best of both worlds: the care and attention of a boutique bank with the resources and connections of a global institution. With access to RBC Capital Markets,¹ there’s no limit to what we can achieve with our clients.

Conclusion

Relationship-based banking
When a company — or any organization — works toward its clients’ best interests, it ultimately benefits everyone involved and elevates the entire industry. By focusing on the relationship rather than the transaction, the City National team helped Heartland achieve its goals and surpassed its expectations, resulting in a positive outcome for both organizations.

When companies and banks build relationships and work together for a common initiative, everyone comes out as winners.