Apollo borrows 2.2 bln euros to finance Verallia buy

Apollo won a competitive auction for Verallia in June with an offer that valued the business at 2.95 billion euros.

Credit Suisse and Deutsche Bank are leading the financing with BNP Paribas, JP Morgan, Nomura, Societe Generale and UBS. The deal will be syndicated to institutional investors and a bank meeting is likely to take place in July, the sources said.

Apollo declined to comment.

A 2.2 billion euro debt financing is five times Verallia’s EBITDA of around 400 million euros, the banking sources said.

The financing will include around 1.65 billion euros of senior debt, which is mostly term loans, and around 370 million euros of subordinated high yield bonds. Around 200 million euros of undrawn loans will also be included, the sources said.

The financing is expected to be denominated in euros and will be a big boost to Europe’s liquid leveraged loan market, which has seen relatively little supply this year and investors have been waiting for event-driven loans.

“This is a very exciting financing for the European market and a lot of money to raise. It is a very large company and a primary buyout, so it is going to tap a lot of new money in loans and bonds. It ticks all the boxes the market has wanted to see,” one of the sources said.

Verallia, which manufactures glass bottles and jars, is the main supplier of bottles for France’s champagne and cognac industries.

It generated 2.39 billion euros in sales and 230 million euros in operating income last year. It has 47 plants in 13 countries and employs nearly 10,000 people.

($1 = 0.8875 euros)