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Jefferson Smurfit

The second sub-underwriting phase of the EURO3.675 billion buyout financing for Jefferson Smurfit will close oversubscribed later this week having drawn a strong response from both banks and institutional investors, via mandated lead arrangers Deutsche Bank and Merrill Lynch.

So far in this round 24 banks have joined the deal, with responses from two banks still outstanding, while 23 US and 15 European institutional investors have also joined the deal, meaning that all 11 of the banks that joined in the first sub-underwriting phase are well below their target final hold levels.

In this round, which is in effect general syndication, banks were asked to sub-underwrite EURO75 million, with a target hold of EURO45 million, for an all-in upfront fee of 125bp. The EURO3.675 billion total debt package comprises EURO2.525 billion of senior debt, a EURO125 million asset sales bridge loan and a EURO1.15 billion bridge to a EURO900 million high-yield bond issue and EURO250 million PIK piece. Total debt to EBITDA is 4.6x, while senior debt is 3.2x, although excluding the bridge loans senior debt is 2.25x.

The EURO2.525 billion senior debt comprises a EURO1.05 billion seven-year term loan A at 225bp over Euribor, a EURO525 million eight-year term loan B at 275bp, a EURO525 million nine-year term loan C at 325bp and a EURO425 million seven-year revolver at 225bp with a 75bp commitment fee.

During the senior sub-underwriting phase, ABN AMRO Bank, Allied Irish Banks, Bank of America, Bank of Ireland, Bank of Scotland, Credit Lyonnais, HypoVereinsbank, JP Morgan and Lehman Bros joined the facility.