Almatis gives UBS boost

In the first European sole leveraged mandate of size since the summer credit crisis, Dubai International Capital has mandated UBS to arrange the debt supporting the buyout of Almatis from Rhone Capital and Ontario Teachers.

Debt totals around US$1bn and launch is expected in two weeks. Structurally, the deal will reflect the new market reality and will be primarily aimed at bank and mezzanine lenders. Tellingly, the leverage of the new facility will be lower than the figure achieved when Almatis was recapitalised earlier this year in a US$920m transaction also led by UBS.

Then the deal was sold at 5.1 times through the senior secured, 5.9 times through the second lien and 6.6 times through the PIK. The new debt structure will be split between senior, second lien and mezzanine.

Since the credit crisis, bank and mezzanine investors, which had largely sat out the worst excesses of the credit boom, have said they are willing to book well structured and priced credits.

But given the back log of unsold deals, underwriting banks have been unwilling or unable to support new transactions, while the reduced debt multiples means the price private equity is able to offer is now below most sellers’ expectations.

UBS is therefore hoping to take advantage of this demand, which remains largely uninterested in booking many of the large unsold transactions in their current form. Moreover, Almatis is a well-known name that was first bought out in 2004 and then subjected to three recapitalisations. Coupled with a strong state-linked Middle Eastern sponsor that is willing to put down a large equity cheque, the name is seen as a sensible one to re-open the market.

In a statement, Dubai International Capital said it will retain the existing management team and further support the global growth strategy pursued by Almatis.