Lipton Teas TLB SteerCo Launches Co-Op via Gibson Dunn; Uptake Exceeds 60%

Lenders to Lipton Teas and Infusion, fka Ekaterra, have formed a steering committee, or SteerCo, and launched a cooperation agreement via law firm Gibson Dunn. The uptake currently exceeds 60% of the term loan B lenders, sources told Octus.

Given the recent liquidity boost the company received from sponsor CVC after a steep performance deterioration, there doesn’t appear to be any imminent trigger, but creditors are preemptively taking steps to organize in the event earnings do not recover quickly enough to enable Lipton Teas to refinance or amend and extend its debt down the line, sources noted.

After injecting €40 million of equity in November last year, sponsor CVC provided a further €210 million to shore up liquidity, consisting of a €160 million loan paying a 9% PIK margin and €50 million of additional equity.

The PIK loan was issued out of Ekaterra Group IP Holdings BV, which is a nonguarantor restricted subsidiary. It sits at the Opco level and ranks structurally ahead of the group’s TLB. Ekaterra’s intellectual property remains in the restricted group perimeter, sources earlier noted.

Performance Woes

Lipton Teas reported weak fourth-quarter 2025 results but earnings stabilized during the first quarter of 2026, as reported. Fourth-quarter 2025 net revenue fell 16% year over year to €371 million from €442 million the same quarter in 2024, driven by a 10% volume decline, while adjusted EBITDA fell 35% year over year to €85 million from €131 million the same period last year. First-quarter 2026 net revenue fell 9% year over year to €333 million from €365 million the same quarter in 2025, driven by a 3% volume decline, but adjusted EBITDA was flat versus the prior year quarter at €57 million.

The group generated €8 million of free cash flow during the fourth quarter of 2025, but burned €100 million during the course of the year, and burned another €38 million of cash during the first quarter this year, which left it with €96 million of liquidity comprising €89 million of cash and €7 million remaining under its almost fully drawn €375 million RCF.

The RCF is subject to a 9.5x senior secured net leverage test when more than 40% is drawn. Lipton reported 11.4x net leverage based on €280 million LTM EBITDA adjusted end-state EBITDA. Actual net leverage based on €252 million LTM adjusted EBITDA was 12.7x.

Lipton is budgeting growing full-year 2026 revenue 3.5% to €1.435 billion from €1.386 billion in 2025, and adjusted EBITDA to improve to €280 million from €252 million with margins rising to 19.5% from 18.2%. That would more than halve the group’s cash burn to about €46 million in 2026.

Management also announced to lenders a new business plan this week developed by the new management team under CEO Marc Busain that addresses Lipton’s past issues and accelerates development to drive strong future growth. Management’s base case projection is 5% compound annual growth rate for revenues by 2029 and margins of 22-24%, which would translate into around €380 million of adjusted EBITDA.