CVC injects US$245.57M into Lipton Teas to support turnaround, avoid debt restructuring
CVC injects €210M into Lipton Teas to support recovery efforts, strengthen liquidity, and reduce restructuring risk as declining revenues and high debt pressure the business.
UK – Lipton Teas and Infusions has secured a €210 million (US$245.57M) capital injection from its majority owner CVC Capital Partners as the private equity group moves to stabilise the business and avert a potential debt restructuring.
The funding package, which combines fresh equity and shareholder loans, follows a €40 million injection made last year and was disclosed to holders of the company’s term loans this week.
The latest move underscores efforts to support a profitability recovery amid mounting financial pressure.
Approximately €160 million (US$187.11M) of the new financing has been structured as secured debt issued against Lipton Teas’ intellectual property outside the United States. This approach allows shareholders to strengthen their creditor position while providing liquidity to the business.
Under the arrangement, the non-US intellectual property remains within the restricted group, although shareholders will hold a priority claim over those assets ahead of existing term loan lenders.
The capital injection comes as the company undertakes a management overhaul aimed at improving performance. Grant Reid, former President and CEO of Mars, has been appointed chair, working alongside Marc Busain, who joined as chief executive officer in October. The leadership changes signal a renewed focus on operational turnaround.
CVC acquired a majority stake in Lipton Teas following its spin-off from Unilever in 2022. The transaction coincided with rising borrowing costs that disrupted the leveraged loan market, forcing banks to offload acquisition debt at a discount to credit funds.
The company currently carries more than €3 billion in debt, including secured term loans, a €375 million (US$438.53M) revolving credit facility, and a second-lien term loan denominated in Australian dollars. Its first-lien loans are trading at approximately 71 cents on the euro, recovering slightly from a one-year low of 68 cents recorded in March.
Lipton Teas’ financial performance has weakened, with the value of a €1.575 billion (US$1.84B) loan declining significantly and investor yields rising sharply.
Despite continued growth in tea consumption in key markets such as the United States, China, and India, traditional black tea sales have declined as younger consumers shift toward coffee.
Revenue is projected to fall from around €2 billion (US$2.34M) before the spin-off to approximately €1.57 billion (US$1.84M) in 2024. According to S&P Global, the company could face liquidity challenges within 12 to 18 months without a sustained improvement in performance.
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