Notes 6/10
Blackstone
Times said Blackstone is buying XLN Business Services in deal worth £140m to £150m.
ECI bought it four year ago for £80m.
Forward Calendar
The forward calendar below has been approved by Sarah besides the inclusion of the reference to
the E&Y report –unfortunately it’s all global figures, they don’t break it down by region…
The forward calendar for European leveraged loan volumes stood at €1.52 billion as of Oct. 3, of
which €760 million is institutional. This was up from €240 million as of Sept. 26 as the pipeline was
boosted by the £1 billion senior refinancing from U.K. automobile recovery firm RAC, expected later
in the month.
The RAC’s transaction is just one of several refinancings due to come to the market as the immediate
pipeline for new LBO deals dwindles. Aside from the debt backing Investindustrial’s acquisition of
Italian lighting firm Flos (which is now out to early-bird bank syndication through UniCredit), and the
€240 million of loans supporting the intended buyout of French holiday company Club
Mediterranee by Global Resorts, there are few acquisition-related deals imminently expected.
That’s not to say that the long-term global M&A backdrop is discouraging – the reverse in fact. Of
the 1,600 global corporate executives surveyed by Ernst and Young for its Global Capital Confidence
Barometer report, 44% expect to complete acquisitions within the next 12 months, a three-year
high. However, it’s harder to be confident about near-term prospects for M&A that will result in
loan or high-yield bond financing in the Europe market. There are various potential M&A situations
pending, including possible jumbo deals from T-Mobile USA/Iliad, SIG Combibloc and United Biscuits,
but the financings for these are not expected to launch in the coming few weeks.
As the flow of M&A-related deals quietens, the market’s focus has shifted to opportunistic deals
such as refinancings, and the RAC is not the only name in the market.
Tomorrow, German automotive supplier Schaeffler will hold an investor call for its refinancing
transaction. The €1.8 billion dual-currency, six-year TLB is being led by Citi, Deutsche Bank and HSBC
as global co-ordinators, according to sources, with Commerbzank, JP Morgan and UniCredit as
bookrunners. A 75bp floor is available across both the euro and dollar tranches, although the
currency split of the deal, the margins and the OIDs have not yet been detailed.
Despite volatility in the high yield and US markets, Styrolution has chosen this fairly quiet moment in
the primary market to relaunch its cross-border refinancing early this week, with bank meetings in
New York and London on Monday and Tuesday respectively. The German plastics materials company
had originally launched its five-year, first-lien facility as a €1.6 billion arranged on a best-efforts basis
by Credit Suisse and Citi as global co-ordinators in the summer but withdrew it due to unfavourable
market conditions. The deal has now reappeared as a €1.05 billion deal led by Barclays and J.P.
Morgan.
Germany’s Tele Columbus is also out in the market with a €500 million refinancing led by BNP
Paribas, J.P. Morgan and Goldman Sachs, while RAC is lining up a senior refinancing loan of around
£1 billion for later in the month.
In the US, the forward calendar of institutional deals fell to $47.5 billion from $51.5 billion last week.
The net number of deals this week is 60. The 52-week averages are 57 deals and $42.3 billion. On
the M&A side of business, there are currently 43 deals totaling $38.5 billion, down from $39.5 billion
last week.
The high yield forward calendar stands at €870 million this week, down from €1.2 billion last week.
Other refis.
RAC coming up.
Club Med.
Jeremy, from IW
ust spoke to jeremy. re the dollar / euro thing, he said they will see how the split and pricing comes
out. current schaeffler, dollar euro loans are priced the same so they will see where the new deal
comes out
Daily
A quiet period for M&A transactions has tempted a steady stream of issuers to launch opportunistic
refinancings and repricings, with Germany’s Schaeffler being the latest to join the fray. A €1.8 billion,
dual-currency refinancing from the company will be used to simplify the automotive supplier’s
capital structure at its opco level. Sources said the existing opco facility lenders have share pledges
on Continental AG, with which it merged in 2010. The refinancing will now release security over the
Continental shares. Price guidance on the new dual-currency tranches is expected to be released at
tomorrow's investor call. The company's euro and dollar denominated term loan E is currently priced
in line at E/L+300 and a 75bps floor.
Schaeffler follows a number of other issuers launching refinancings in October. Styrolution will hold
its London based bank meeting tomorrow to market its €1.05 billion five-year refinancing after
meeting with investors about the cross-border deal today. Tele Columbus is also out with a €500
million refinancing, while a refinancing of around £1 billion is expected from motoring club RAC later
in the month.
In the absence of M&A deals, arrangers continue to look for more opportunistic deals. Schaeffler is
one of them by today launching a 1.8 billion refinancing of its existing loan facilities t
Unit4
Dutch business-software group Unit4 has repriced its term loan B and revolving credit facility,
lopping 50bp from the margins of each.
Goldman Sachs and ING led the repricing, which saw the margin of the €440 million TLB due 2021
cut to E+425 from E+475, and the margin on the €50 million revolver due 2020 reduced to E+400
from E+450.
A 10bp waiver fee is available and six month 101 soft call protection has been added to the TLB from
the closing of the repricing.
Unit4 completed the syndication of the €655 million, first- and second-lien loan supporting its
Advent-backed take-private in January this year. The TLB initially had a six-month soft call option,
which expired in September. Alongside Goldman Sachs and ING, Credit Suisse was an MLA and
bookrunner on the original transaction. The deal included a €165 million second-lien facility that was
pre-placed.
Yes achieved the 425bps TLB and 400bps RCF (from 475bps TLB and 450bps RCF) , 10bps waiver
fee. 6months 101 soft call TLB from close
Incurrence
Tim Spray
Median Kliniken –nothing concrete but heard it’s not gone our way. Gone to waterland.
Christs Jewellry. This week will be news. UnICredit on two trees.
SIG Combibloc –delayed to allow trade to catch up.. Not based on anything concrete.
Shaun, Lloyds
Fat Face. Daring deal at that leverage. Fashion segment –but is it really? It’s more apparel. Is that
even better?
How many div recaps get underwritten? Few few/ Sponsors are keen to max cash out. Slightly
pushing it from the MLAs.
Unit4 -425 looks quite decent.
Bifurcation? Real bifurcation of market or hangover from summer? Lot of deals in the summer that
left some people resource short
OIDs are still pretty wide. 98.50. Still look as wide as they’ve been in 18 months.
BVD 475 is very good for sterling especially at that leverage.
We need a couple more deals to go well.
United Biscuits –also considering IPO. Would be big lump of sterling.
Waterland bids for Median Kliniken
Advent International Corp. agreed to sell German rehabilitation clinic group Median Kliniken GmbH
& Co. to Waterland Private Equity Investments BV for more than 800 million euros ($1 billion),
people with knowledge of the matter said.
An announcement of the sale could be made as early as this month, said the people, who asked not
to be identified because they aren’t authorized to speak publicly.
Median, which Advent acquired with real-estate investor Marcol in 2009 and put up for sale earlier
this year, now operates more than 40 clinics compared with 27 at the time of purchase, according to
the Berlin-based company’s website.
The clinics offer a range of rehabilitation services for patients including aftercare for neurological
and orthopedic surgery, heart attacks and strokes.
Spokesmen for Advent and Waterland declined to comment. Representatives for Marcol and
Median didn’t immediately respond to requests seeking comment.
Lafarge/Holcim
CRH/Cemex looking at combined bid. HeidelbergCement and Votorantim Cimentos also looking at
joint bid. Assets could be valued at €4bn-7bn.
The pair are seeking buyers for Holcim's French activities, Lafarge's German interests and other
operations in Austria, Hungary, Romania, Serbia, Britain, Canada, the Philippines, Mauritius and
Brazil.
BC/Advent/Temasek have team up.
CVC teamed up with with Abu Dhabi Investment Authority and GIC.
Bain and Onex
Blackstone, Cinven and CPP.
Weekly
Cross border –two cross border deals. Might be a chance to see the pricing differentiation between
the two markets.
Unity media bond –dropped euros in favour of dollars.
Styrolution might not be cleanest comparable as might struggle.
(repricings)
M&A
ELLI repayments. Plus might be something from SPG. Plus Boots expected.
Nacho
Taking a look at supply/demand diagnosis –things still look good for borrowers. Not much in
October, and not much soon. Still a number of CLOs in Sept and good size.
Things are quite bipolar, influenced by the bond market. Good opportunities in secondary in bond
and US markets. More patchy in the bond market at the moment.
Styrolution –second lien biggest in Europe?!
If it had launched in July would have got euros inside dollars.
Sig –down to a couple of sponsors –CVC and Bain.
Tim Cottrell
Look again at SIG –names we had last time have now changed.
Things are picking up. Not this week’s stuff though.
Stuart, Carlyle
Schaeffler gets done at 350.
Styrolution. 500-525, with a floor, mid 90s.
Cyclical, cov-lite.
Buyers can name their price.
Tom Egan
In Europe, expectation of rate rises is 0. In the US, the outlook for rates is significantly higher.
Generally tend to see euros wider than dollars a well bid transactions. General argument is there’s
been very little supply in Europe vs the us.
Most investors have global reach so are looking at US. US is more liquid, deeper market and there’s
been more pricing movement. When flow picks up in euriope, people will expect to get benefit of
deals. Would expect Europe to be flat to 25bp wider than US.
SIG -6/7 bids now. CVC and Onex split up.
Next year’s business.
Styrolution: is different to the last one. Different structure. Not quite as dire as it needs to get done.
We’re mindful to get the deal. Not going to do out at any price. Not a case of price at any price. Not
going to throw lots at it just to get it done. If a geopolitical world blows up and market goes under
we can pull it. There are options.
SIG
CVC Capital Partners has withdrawn from the bidding process for Reynolds Group Holdings’ drinks
carton division SIG Combibloc, leaving three private equity firms and trade buyers jostling for the
firm.
Bain Capital, BC Partners, Onex Corp and trade buyers remain involved in the process, according to
sources. CVC had been involved in a consortium bid with Onex, but has now withdrawn from the
deal.
Packaging firm Reynolds Group hired Goldman Sachs to explore the sale of SIG, which could value
the division at $5 billion, sources said. A cross-border senior and subordinated loan and bond
financing package of up to €3 billion is being prepped in support of a potential sponsor win,
according to sources.
First-round bids were submitted in August, with re-confirmation due in mid-September. A final
phase was expected to follow, according to sources.
Reynolds acquired Switzerland-based SIG Combibloc (formerly known as SIG Holding) in May 2007,
for roughly €1.7 billion. The group produces packages and cartons for beverage and liquid food
products, including juices, milk, soup, and sauces, with most of its revenue generated in Europe and
Asia.
Daily -Weds
The dwindling pipeline of M&A is, for the moment, providing a clear and open market for issuers to
complete opportunistic deals. With no LBO deals to distract investors, both Scout24 and Unit4 have
been out to cut the pricing of their existing debt, while Schaeffler and Styrolution had launched
cross-border refinancings. But with a number of auctions now drawing to a close, the flow of new
buyout loans is set to pick up in the coming few weeks to reclaim investors’ attention.
The auction process for the sale of German retailer Douglas’ Christ jewellery business, which is being
led by J.P. Morgan is set to wrap up by the end of this week, according to sources. Advent
International is also expected to announce the sale of German clinic chain Median Klinken to
Waterland Private Equity in the next few days, say sources. That buyout is thought to be for around
$1 billion, according to srouces.
Any debt supporting the purchase of SIG Combibloc , the drinks carton unit being sold by packaging
firm Reynolds Group, is not likely to emerge until 2015. But as the buyout financing could include
senior and subordinated bond and loans of up to €3bn, according to sources, it may be worth the
wait. The field of bidders for SIG has tightened recently, with CVC Capital Partners withdrawing from
the process. The private equity firm had been involved in a joint bid with Onex Corp. Onex remains
in the bidding process alongside Bain Capital, BC Partners and trade buyers, say sources.
Elsewhere in the LBO pipeline, Blackstone and PAI are still considering bids from Kellogs, Ulker
Biskuvi and Burton’s Biscuits for United Biscuits, the maker of Jaffa Cakes, McVitie’s brand biscuits
and Twiglets.
A number of buyers are also thought to be considering bids for the assets put up for sale by Holcim
and Lafarge before their planned merger. CRH and Cemex, and Heidelberg Cement and Votorantim
Cimentos are both thought to be considering joint bids, while on the private equity side a number of
joint bids are being prepared, according to sources. BC Partners, Advent International and Temasek
are considering the deal, and CVC Capital partners has joined with Abu Dhabi Investment Authority
and Singapore sovereign wealth fund GIC, say sources. There are also joint bids being considered by
Bain Capital and Onex Corp, and Blackstone, Cinven and CPP.
CRH/Cemex looking at combined bid. HeidelbergCement and also looking at joint bid. Assets could
be valued at €4bn-7bn.
The pair are seeking buyers for Holcim's French activities, Lafarge's German interests and other
operations in Austria, Hungary, Romania, Serbia, Britain, Canada, the Philippines, Mauritius and
Brazil.
BC/Advent/Temasek have team up.
CVC teamed up with with Abu Dhabi Investment Authority and GIC.
Bain and Onex
Blackstone, Cinven and CPP.
Wagamama
Wagamama is considering refinancing the £145 million of debt that backed Duke Street Capital’s
£215 million buyout of the noodle chain in 2011, according to sources. The issuer is speaking to a
number of banks about a potential bond or loan transaction to replace its existing debt.
Any potential refinancing is unlikely to come to the market before late in October, according to
sources.
Wagamama’s debt from its 2011 buyout comprised:
 £40 million, six-year TLA, L+450
 £50 million, seven-year TLB, L+500
 £10 million, six-year RCF, L+450
 £15 million, six-year capex facility, L+450
 £30 million mezzanine facility.
GE Capital, Investec and Lloyds were MLAs and bookrunners on the original deal supporting the
acquisition of Wagamama from Lion Capital. The loans were well oversubscribed in the early-bird
phase, meaning that the debt was never launched to general syndication.
British chain Wagamama was launched in 1992, and now operates more than 140 restaurants across
Europe, the UAE and the United States.
Exact
Private equity firm Apax’s €730 million acquisition of Exact, the Dutch software firm, will be financed
by €374.3 million of debt.
Apax has already received secured fully committed debt financing letters of €374.3 million alongside
bind equity commitment letters of €381.6 million to fund the deal.
Exact’s leverge will not exceed 6x through the debt financing, as specified by the acquisition finance
agreements.
Leonardo & Co., RBC Capital Markets, Deutsche Bank and ING are acting as financial advisors to
Apax, while Rothschild and Lazard are financial advisors to Exact.
Apax has agreed the buyout through Eiger Acquisition, a wholly owned subsidiary of certain funds
advised by Apax. It has made a full offer for all of the company’s existing shares at €32 per share
(cum dividend), a 27% premium to the closing price of the stock on July 10. Founding and other
major shareholders with around 60% of the company’s outstanding shares have agreed to the offer.
Tim Cottrell
Exact is in the US. Might be all US. TBD. Bonds or loans.
Dividend coming. Self-evident that in a quiet market, companies that are doing well will look to
return something to shareholders.
Not known where anything is since July.
Jeremy Selway
Not heard about Exact/Apax. Might be us, might just be advising.
Software company so wouldn’t be surprised if was in US.
Apax/Exact
Apax will primarily turn to the US market for the €374.3 million of debt supporting the buyout of
Dutch software firm Exact, sources say.
A euro-denominated piece will be included in the first-lien debt, and possibly also in the second-lien
portion, according to sources.
Deutsche Bank and RBC will lead the financing. The two banks have, alongside ING, underwritten the
deal and with Leonardo & Co. were financial advisors to Apax.
Sources close to the deal say that while the repricing of Unit4 this week shows that there is appetite
for the software sector in Europe, the US has many more comparables available to investors making
financing there easier. Exact has operations in North America,, with offices across the US and
Canada.
Alongside the debt, the €730 million acquisition of Exact will also be funded by bonding equity
commitment letter of €381.6 million. Apax has offered to pay €32 per share (cum dividend) for the
firm, and founding and majority shareholders with around 60% of the company’s existing shares
have already agreed to the offer.
GE
Theo Weber has been promoted at GE Capital to run tis leveraged finance business in Germany,
Austria and Switzerland.
He is based in Munich.
Christina Goettinger has rejoined GE Capital’s leveraged finance team from the company’s equity
division and will report to Weber.
The appointment marks a wider drive by GE Capital to grow its continental European operations,
identifying opportunities with private equity firms focusing on the mid-market across the region. GE
Capital has completed four leveraged finance deals in Germany in 2014 and has supported several
portfolio companies with add-on financings to help them grow into new markets.
“GE Capital has promoted Theo Weber to run its leveraged finance business in the
Germany/Austria/Switzerland area. Reporting to Weber, Christina Goettinger has rejoined the GE
Capital’s leveraged finance business as a director, after several years in the firm’s equity business.”
Blurb
A stream of cross-border loans announced this week could bring some clarity on the differential
between the US and European leveraged loan market as Apax turns to the dollar market for the loan
backing its takeover of Dutch software firm Exact.
Supply remains light in high-yield, with a single new issue from Heathrow, while Unitymedia dropped
the euro tranche of its cross-border deal in favour of all-dollar financing. The European mid-market
has seen a swell of Gallic activity, from Tikehau underwriting the buyouts of Maesa by EDRIP and La
Foir’Fouille by management, to Access Capital Partners’ mezzanine investment in Groupe Marle. In
the UK, HSBC backed LDC’s acquisition of Eley Group, while GSO underwrote the MBO of XLN with a
unitranche facility.