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UK private equity firm Lion Capital has dropped its plans to sell the Nordic unit of Findus, after it was unable to reach an agreement over the price.

Frozen food maker Findus had attracted several potential buyers including Swiss food giant Nestlé, Norwegian consumer goods group Orkla, and seafood exporter Leroy Seafood, reported Financial Times citing people familiar with the matter.

The sale of the Nordic unit, which was being advised by investment bank Rothschild, was expected to fetch between €700m and €800m, which could have been used by Lion to lower Findus’ £721m debt.

Instead of selling the unit, Lion Capital will now seek to provide a capital injection of £75m to £100m, which will lower the debt and also reset some of the terms of the financing.

Findus is a branded frozen food manufacturer and owner of the Young’s seafood brand, with market leadership in Sweden, Norway and Finland in each of the fish, vegetables and frozen ready meals segments.

Its UK division has been struggling due to price pressures as supermarkets such as Tesco and Sainsbury’s compete to offer best prices, currency volatility, and the increasingly high cost of fish and other base ingredients.

Findus, which produces 345,000t of food annually from its 21 facilities, made a net loss of £151.6m in 2010, due to high interest payments for its £721m debt, which affected its operating profits.

Its Nordic business has however performed well: In 2010, the Nordic region accounted for nearly a third of Findus’s overall revenues of more than £1.1bn in 2010.

Last April, Findus entered into an agreement with the banks to relax covenants on its debt, as Lion Capital injected further equity to support its growth.

Lion Capital, which was formed following a spin-out from the troubled private equity firm Hicks Muse seven years ago, purchased Findus in late 2008 for £1.1bn.

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