Bookbuilding on European senior leverage loans is relatively rare, although second-lien deals are often priced on this basis
The move makes sense, however, given the proportion of LBOs that have raised huge oversubscriptions of late and been subject to huge pricing and structural flexes. KION is the latest example but it comes after PagesJaunes, United Biscuits and TdF.
Fraikin is a good name to go down the bookbuild route on because it is a well-known name and a good credit. “Rather than try to guess what the market will accept through a flex, we thought we would ask them their pricing requirements directly,” said one banker on the deal.
The lion’s share of the debt consists of a €900m borrowing base facility priced at 125bp over Euribor out-of-the-box. A €45m ticket pays 50bp upfront. This will act as a bridge to a securitisation and is likely to be taken out within a year.
The longer-term debt is split between a €270m term loan B and a €50m revolver. Both pieces are structured with a six-year tenor and price talk of between 225bp and 275bp over Libor. Bank lenders are also offered a 100bp fee on the revolver. In addition there is a €66.4m mezzanine loan that sponsor CVC has already placed. The transaction has a typical French LBO structure with the borrowing base held at the op-co level and the term, revolver and mezzanine at the hold-co. The leverage is 3.5x senior net debt to Ebitda and 4.4x through the mezzanine.