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.

“Our standards are high and City National continuously met the highest measure among financial institutions. The corporate world is in a great place with their financial expertise”

— Kris Govindadas, CFO, Heartland Food Products

“When we first realized we’d be able to save Heartland such significant interest costs, it felt like we won the lottery — but for our client.”

Jennifer Braasch Managing Director Food & Beverage

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.

"Heartland needed more than a bank — they needed guidance and expertise. We were able to come up with a solution that worked for them because we took the time to actively listen to their needs," said David Hasenbalg, group head, senior managing director, Food & Beverage at City National.

David Hasenbalg Group Head, Senior Managing Director Food & Beverage

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.

“It has been a pleasure to work with a bank that is interested in the clients’ success in reaching its capital structure objectives. The dedication we saw from the City National team to help us reach our goals surpassed our expectations. It was a mutually beneficial relationship from the start.”

— Ted Gelov, CEO Heartland Food Products


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.

1City National Bank is an affiliate of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC and an indirect wholly owned subsidiary of the Royal Bank of Canada. 

Splenda® is a trademark of Heartland Consumer Products LLC, registered in the U.S. and other countries. This article is for general information and education only. It is provided as a courtesy to the clients and friends of City National Bank (City National). City National does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. 

This article may not be reproduced, distributed or further published by any person without the written consent of City National. 

In addition, this presentation is not to be construed as an offer, or solicitation of an offer, to buy or sell any financial instrument. It should not be relied upon as specific investment advice directed to the viewer’s specific investment objectives. Any financial instrument discussed in this presentation may not be suitable for the viewer. Each viewer must make his or her own investment decision, using an independent advisor if prudent, based on his or her own investment objective and financial situation. City National Bank (and its clients or associated persons) may, at times, engage in transactions in a manner inconsistent with this presentation and, with respect to particular securities and financial instruments discussed, may buy from or sell to clients or others on a principal basis. Past performance is not necessarily an indication of future results. 

City National Bank, its managed affiliates and subsidiaries, as a matter of policy, do not give tax, accounting, regulatory or legal advice, and any information provided should not be construed as such. Rules in the areas of law, tax, and accounting are subject to change and open to varying interpretations. You should consult with your other advisors on the tax, accounting and legal implications of actions you may take based on any strategies presented, taking into account your own particular circumstances. 

All loans, lines of credit, credit cards and other types of financing are subject to credit approval by City National Bank. Additional terms and conditions apply.