Talk about a Tim Tam slam: the Government has just poured another $45 million into Arnott's Biscuits locally via the National Reconstruction Fund as part of a debt refinancing.

Update: See below this story for an update from Arnott's after I wrote this yesterday.

The deal was announced as part of a joint funding arrangement between the National Reconstruction Fund (NRF), new Arnott's corporate overlords KKR as well as Morgan Stanley and MUFG.

It's big bikkies (I'm sorry, the pun fever has taken over me), and will see $45 million of the public purse poured into Arnott's to help it make some of its soon-to-mature debt payments. Arnott's reportedly has $1.75 billion in borrowings that come due in 2026. 

Whatever you call it, the government calls it 'support for advanced manufacturing and export growth' for one of Australia's most beloved brands. But in practice it shores up the balance sheet of one of Australia’s biggest food companies.

The now-KKR-owned Arnott’s, which employs about 2500 people across five domestic facilities, has pitched the refinancing as a step toward 'expanding production' and 'lifting exports'. The legendary and nation-definining Tim Tam already has traction overseas, with more than five million packs sold in the UK since April. The boffins at the NRFC see the deal as a chance to push a national icon further into global markets while keeping production lines onshore.

The NRFC says the deal fits within its mandate to invest in value-adding agriculture, one of seven priority areas created by legislation. The fund has now deployed more than $1 billion since late 2024 and this is its third debt transaction. In theory, the backing makes sense: food processing and consumer packaged goods are areas where Australia can compete.

Now I need a cup of tea.

Update 11 December, 9am: The head bikkie breaker at the Arnott's corporate affairs department sent me quite the email after I published this story yesterday. In the interest of making sure their voice is heard, I wanted to dunk it into the story.

Chelsea Lahav, Head of Corporate Affairs at the Arnott's Group, wrote to me and said that referring to the debt refinancing round as a bailout in this story "couldn't be further from the truth".

She says that "the NRF were one of over 150 lenders participating in the oversubscribed refinancing, and did so on the same commercial terms as all others...it is not, as you suggested, any kind of bail out".

Lahav was also at pains to point out that S&P recently affirmed its credit rating for the Arnott's Group. Among the polite words that the Standards & Poors folks issued in its press release about the rating, it did land on a 'B' for the now $2+ billion it has under debt financing. Arnott's debt is currently more than 7x its EBITDA, and it is now under private equity ownership - both of which aren't great signals when assessing corporate debt.

That said, S&P did add that, as long as all goes well for Arnott's, it expects continued "sound operating performance" thanks to its free cash flow, positive earnings and could upgrade the rating in future if its expansion into Asian markets goes well.