The £1.45bn loan backing the secondary buyout of United Biscuits by Blackstone and PAI is getting a strong response from the market and heading for a blow-out.
Bookrunners Barclays, Goldman Sachs and JPMorgan plan to keep the books open until the end of this week. The deal’s £1.025bn senior debt is structured without an A tranche, which is generally taken by banks. And £287.5m – or about 65% of the B and C tranche – has been carved out for funds, which is well above the usual 50%. Clearly the leads will be heavily targeting institutional investors in syndication and the structure is further evidence of the huge role that funds play in today’s European leveraged loan market. Senior debt comprises a £437.5m eight-year term loan B at 250bp over Libor, a £437.5m nine-year term loan C at 300bp, a £50m seven-year revolver at 212.5bp and a £100m seven-year capex line at 212.5bp. Additionally, there is a £175m 9-1/2 year second-lien tranche at 450bp over Libor and a £250m 10-year mezzanine tranche.Senior net debt to Ebitda is 4.5, rising to 5.4 through the second-lien debt and 6.7 through the total debt. Banks will earn 85bp upfront for £25m and 70bp upfront for £15m.
The vendors are Cinven, Kraft Foods and Mid Ocean Partners. PAI is also an existing owner but is part buying its fellow owners out as part of this deal.
United Biscuits was last in the market in 2004 with a £682.4m amendment and add-on to fund its acquisition of Jacobs. That debt was split between a £267.4m 5-1/2 year amortising term loan A at 225bp over Libor, a £165m equivalent six-year bullet term loan B (which is split between a £100m piece and a £65m-equivalent euro tranche), a £200m senior first loss tranche C, which matures in January 2011 and a £50m 5-1/2 year revolver.