LBO Syndications arranged February

Alimak Hek

Target nation: Sweden

Date announced: 14/12/06

Deal type: LBO

Acquirer(s): Triton

Total value: €238m

Mandated arranger(s): CIBC World Markets, Svenska Handelsbank

Financing: €220m

CIBC World Markets is sole bookrunner and joint mandated lead arranger alongside Svenska Handelsbank on a SKr2bn facility backing the buyout of Swedish construction equipment wholesaler Alimak Hek by sponsor Triton. The facility will be made up of a mix of senior and subordinated debt. In December Triton agreed to acquire Alimak Hek from its joint venture parents Ratos, and 3i Group.

Apem

Target nation: France

Date announced: 15/11/06

Deal type: LBO

Acquirer(s): Barclays Private Equity

Total value: Unknown

Mandated arranger(s): SG

Financing: €64.5m

Apem is in the market with a €64.5m LBO financing, via mandated lead arranger SG. Barclays Private Equity France is the sponsor. Debt comprises a €16.5m seven-year term loan A at 225bp over Euribor, a €18.5m seven-year term loan B at 250bp, a €18.5m nine-year term loan C at 300bp and a €6m seven-year revolver at 225bp.

Armacell

Target nation: Germany

Date announced: 14/02/07

Deal type: LBO

Acquirer(s): Investcorp

Total value: Undisclosed

Mandated arranger(s): BNP Paribas, CIBC World Markets

Financing: €382.5m

Bookrunners BNP Paribas and CIBC World Markets have launched the €382.5m facility backing sponsor Investcorp’s secondary buyout of Armacell International, a German manufacturer of specialist engineered foam products. The facility is made up of a senior €50m seven-year term loan A paying 225bp over Euribor, a €102.5m eight-year term loan B at 250bp, a €102.5m nine-year term loan C paying 300bp, a €30n seven-year revolver at 225bp, a €30m seven-year acquisition line at 225bp, a €33.75m 9.5 year second lien tranche paying 475bp and a €33.75m 10-year mezzanine tranche paying 4.25% cash and 4.75%. Investcorp agreed a deal in December to buy the business from sponsors Gilde and CVC Capital.

Asco

Target nation: UK

Date announced: 20/10/06

Deal type: MBO

Acquirer(s): Phoenix Equity Partners

Total value: £125m

Mandated arranger(s): HSBC

Financing: £118m

HSBC has completed the £118m debt package supporting Phoenix Equity Partners’ £124m buyout of Asco, a Scottish oil services group. The facility is split between senior debt of £100m and a £18m mezzanine portion, which Indigo has taken. The senior portion closed oversubscribed and the B/C tranches will be flexed down as a result.

AWG

Target nation: UK

Deal type: LBO

Acquirer(s): Canada Pension Plan Investment, Colonial First State Global Asset Management, Industry Funds Management and 3i

Total value: Undisclosed

Mandated arranger(s): Deutsche Bank

Financing: £873m

Bookrunner Deutsche Bank has launched the £873m loan supporting the Ospray consortium’s acquisition of AWG, the owner of Anglian Water. The loan is split between a £450m five-year term loan paying 250bp over Libor, a £25m revolver and a £398m cash funds. Bank lenders are invited to join on tickets of £35m for 45bp, £20m for 37.5bp or £10m for 32.5bp. Both funds and banks are being approached for what is a structured as a hybrid transaction. Ospray Acquisition is a consortium made up of the Canada Pension Plan Investment, Colonial First State Global Asset Management, Industry Funds Management and 3i. The group first made the offer for AWG in October last year at £15.55 a-share, which was later increased to £15.78 a share, after AWG said it was talking to other potential bidders. The acquisition finally closed in December.

Borsodchem

Target nation: Hungary

Date announced: 17/01/07

Deal type: LBO

Acquirer(s): Permira

Total value: Undisclosed

Mandated arranger(s): UniCredit, Lehman Brothers and RBS

Financing: €1.15bn

UniCredit, Lehman Brothers and RBS have launched the €1.15bn financing backing Permira’s buyout of Hungarian chemicals company Borsodchem. The structure comprised a €275m eight-year B tranche paying 275bp, a €275m nine-year C tranche paying 325bp, a €100m seven-year revolver at 225bp, a €300m capex facility at 250bp, and €200m of mezzanine, for which pricing has not been disclosed. There is no A tranche. Two take-and-hold tickets are offered. Arrangers will earn 80bp for €35m and co-arrangers 65bp for €20m. Some €150m of the B and C is carved out for funds. Seven banks joined the senior phase of the deal late last year. They are Bayern LB, Erste Bank, HBOS, KBC, Mizuho Corporate Bank, RZB and West LB. Each committed to €125m sub-underwriting tickets, from which they were scaled back. Permira’s buyout has been approved by Hungary’s State Financial Supervisory and the EU Commission. Permira bid Ft3,000 a share for all of Borsodchem Nyrt in an offer valuing the company at Ft228.5bn (US$1.1bn). The purchase of Borsodchem is Permira’s first in eastern Europe and it is hoping to benefit from growing demand for plastics in the region.

Ferretti

Target nation: Italy

Date announced: 27/10/06

Deal type: Secondary

Acquirer(s): Candover

Total value: Undisclosed

Mandated arranger(s): Mediobanca and RBS

Financing: €1.28bn

Speedboat manufacturer Ferretti has launched a €1.28bn deal backing its secondary LBO by Candover. Mediobanca and RBS are bookrunners. Senior debt comprises a €175m seven-year term loan A at 200bp over Euribor, a €270m eight-year term loan B at 250bp, a €270m nine-year term loan C at 300bp, a €65m earnout facility, which will remain undrawn until certain conditions are met and splits pro-rata across the senior tranches, a €50m seven-year capex line at 200bp, a €130m seven-year revolver at 200bp. Junior debt comprises a €120m none-and-a-half year piece at 475bp and a €200m mezzanine tranche paying 4% cash and 5% PIK. Leverage is 4.8x through the senior and 7x total. Senior lead arrangers can join on €65m for 100bp, lead arrangers on €35m for 80bp, and arrangers on €20m for 65bp. 65% of the B and C tranches have been carved out for funds. Permira is the vendor, although it will retain a junior equity stake in the business. The former sponsor bought Ferretti in 2003 and has presided over a period of strong earnings growth. The facility that backed the original LBO was recapped in €665m deal by the same two leads in 2005. The group designs and manufactures luxury motor yachts and speedboats in the €7m-€60m range, under the brand names Ferretti Yachts, Pershing, Itama, Bertram, Riva, Apreamare, Mochi Craft, Custom Line and CRN.

Consolis

Target nation: Belgium

Date announced: 11/12/06

Deal type: Secondary

Acquirer(s): LBO France

Total value: Undisclosed

Mandated arranger(s): KBC

Financing: €845m

KBC is out with the €845m debt package supporting LBO France’s secondary buyout of Consolis, a Belgian pre-cast concrete group. Prior to launch BNP Paribas, Danske Bank, OKO Bank and SG all joined as lead arrangers. Bank lenders are now invited to join as arrangers on tickets of €25m for 55bp or co-arrangers on €20m for 50bp. Senior debt is split between a €176.8m term loan A, a €209.1m eight-year term loan B, a €209.1m nine-year term loan C, a €100m seven-year revolver and a €55m seven-year acquisition line. In addition there is a €28.4m nine-and-a-half year second lien and a €66.6m 10-year mezzanine loan. The junior pieces have already been placed and will not be syndicated further, while the institutional carve out on the B and C tranches is set at 60%. Initial leverage ratios are set at 4.8x to senior debt, 5x through the second lien and 5x total. LBO France is contributing €292m or 29.7% of the total capitalisation at closing. LBO France has bought Consolis from Industri Kapital.

Dockwise

Target nation: Netherlands

Date announced: 23/12/06

Deal type: LBO

Acquirer(s): 3i

Total value: US$700m

Mandated arranger(s): Fortis Bank

Financing: US$680m

The US$680m financing backing 3i‘s buyout of heavy transport shipping operator Dockwise has launched, via bookrunners Lehman Brothers and Unicredit and mandated lead arranger. Fortis Bank. Debt comprises a US$190m eight-year term loan B at 250bp over Libor, a US$190m nine-year term loan C at 300bp, a US$60m seven-year revolver at 225bp and a US$40m capex facility, whi9ch converts into a B and C tranche in equal measure upon drawing and is priced as such. Additionally there is a US$65m nine-and-a-half year second lien tranche at 475p over Libor and a US$135m 10-year mezzanine tranche paying 9.75%. Total net debt to Ebitdas is 5.3x. While syndication is heavily targeted at institutional investors as can be seen by the lack of A tranche, a limited number of banks have been invited to join on US$25m for 65bp upfront. Dockwise operates a fleet of 15 semi-submersible vessels used in transportation of heavy vessels such as oil rigs. Offshore services company Heerema Group and Norwegian maritime group Wilh. Wilhelmsen are the vendors.

Fraikin

Target nation: France

Date announced: 07/12/06

Deal type: Secondary

Acquirer(s): CVC

Total value: €1.35bn

Mandated arranger(s): Deutsche Bank and JPMorgan

Financing: €1.22bn

Bookrunners Deutsche Bank and JPMorgan are out with the €1.22bn debt package supporting CVC’s secondary buyout of Fraikin, a French freight vehicle hire group. Unusually for the loan market the term loan and revolving portions are being syndicated on a bookbuild basis. 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. 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 to 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. Leverage is 3.5x senior net debt to EBITDA and 4.4x through the mezzanine. Bookbuilding on European senior leverage loans is relatively rare. However, given the proportion of LBOs that have seen their pricing flexed down recently the leads felt as Fraiken is already well known to the market a bookbuild process was appropriate for the credit. “Rather than try and guess what the market will accept through a flex, we thought we would ask them their pricing requirements directly.”

HC Starck

Target nation: Germany

Date announced: 23/11/06

Deal type: LBO

Acquirer(s): Advent and Carlyle

Total value: €1.2bn

Mandated arranger(s): Commerzbank

Financing: €960m

Bookrunners Dresdner KW and Mizuho Corporate Bank with mandated lead arranger Commerzbank are out with the €960m debt package supporting the buyout of H.C. Starck. Sub-underwriters are invited to join on US$50m with a US$35m target hold for 125bp. In addition, there are take-and-hold tickets of US$25m paying 85bp and US$15m paying 70bp. Senior debt is split between a E50m seven-year term loan A paying 200bp over Euribor, a €250m eight-year term loan B paying 250bp, a €250m nine-year term loan C paying 300bp, a €150m seven-year revolver at 200bp drawn and a €60m seven-year capex facility at 200bp. In addition there is a €75m nine-and-a-half-year second lien loan paying 475bp over Euribor and a €125m 10-year mezzanine loan. Leverage is 3.9x senior net debt to Ebitda, 4.5x through second lien and 5.4x total. Advent and Carlyle are buying H.C. Starck from Bayer for €1.2bn.

KION

Target nation: Germany

Date announced: 28/12/06

Deal type: LBO

Acquirer(s): KKR and Goldman Sachs Capital Partners

Total value: €4bn

Mandated arranger(s): Barclays, Credit Suisse, Goldman Sachs, HVB, Lehman Brothers and Mizuho Corporate Bank

Financing: €3.3bn

The €3.3bn of debt backing the buyout of KION, the materials handling unit of German industrial gases giant Linde, has become the latest buyout financing to be subject to a heavy structural and pricing flex. Bookrunners Barclays, Credit Suisse, Goldman Sachs, Unicredit, Lehman Brothers, Mizuho Corporate Bank and UniCredito are asking lenders to allow the €300m 10-year mezzanine to be replaced by €150m being added to the B and C tranches respectively. Pricing on the B and C tranches will be cut by 25bp and 50bp respectively, while the margin on the second lien debt will also be lowered 50bp. Post-flex, the structure comprises a €900m eight year term loan B paying 225bp over Euribor, a €900m nine-year term loan C paying 250bp, a €200m nine-and-a-half year term loan D (second lien) at 400bp, a €250m 18-month leasing bridge at 150bp, a €350m 18-month receivables bridge at 150bp, a €400m seven-year capex line at 200bp and a €300m seven-year revolver at 200bp. Up to €1.5bn of the B and C tranche and all of the second lien debt has been carved out for funds. There is a €300m equivalent dollar carveout in each of the TLB and TLC tranches. The flex leaves leverage at 4.25x through the senior debt and 4.59x through the second lien. The flex comes after a blowout general syndication, which came after a successful senior phase in which BNP Paribas, CIT, Commerzbank, Dresdner KW, Helaba, Nomura, Rabobank and SMBC joined what is the largest buyout of a German company. That phase got a 100% hit rates. KKR and Goldman Sachs Capital Partners paid Linde €4bn for the company. Credit Suisse provided the staple financing for the deal. KION group is an umbrella company for forklift and industrial equipment brands Linde, STILL, and OM. The group employs over 20,000 people and had sales of around €3.6bn in 2005.

Mölnlycke Health Care

Target nation: Sweden

Date announced: 26/01/07

Deal type: Secondary

Acquirer(s): Investor AB and Morgan Stanley Principal Investments

Total value: €2.85bn

Mandated arranger(s): HSBC, Morgan Stanley and SEB Merchant Bank

Financing: Unknown

HSBC, Morgan Stanley and SEB Merchant Bank have been mandated to support Investor AB and Morgan Stanley Principal Investments’ agreed bid for Swedish medical products company Mölnlycke Health Care Group. Apax is selling the group for €2.85bn. The debt package will consist of senior, second lien and mezzanine elements with HSBC and Morgan Stanley mandated on both senior and junior elements with SEB Merchant Banking taking a lead role on the senior only. Apax acquired Mölnlycke back in 2005 in a secondary buyout from Nordic Capital supported by a €1.2bn buyout. The group completed a €127m B loan add-on last year with Barclays and Deutsche Bank as mandated lead arrangers.

PagesJaunes

Target nation: France

Date announced: 26/07/06

Deal type: LBO

Acquirer(s): KKR and Goldman Sachs

Total value: Unknown

Mandated arranger(s): Mizuho Corporate Bank

Financing: €3.6bn

The €3.6bn debt package supporting the buyout of PagesJaunes has been subject to a huge structural and pricing flex after raising a huge oversubscription. Bookrunners are Banc of America Securities, Calyon, Deutsche Bank, Goldman Sachs, JPMorgan and Lehman Brothers while Mizuho Corporate Bank is a mandated lead arranger. The €525m 10-year mezzanine tranche, which pays 4% cash and 4% PIK, has been reduced by €315m to €210m. The €315m added among the B, C and second lien tranches with €110m added to the B and C tranches respectively and €205m being added to the second lien tranche. As well as this aggressive structural flex, pricing has also been lowered. Pricing on the holco B and C tranches has been slashed 50bp to 225bp over Libor, while pricing on the seven-year opco level debt has been cut 10bp to 175bp. Second lien pricing has been reduced 25bp to 425bp. Pre-flex, the debt comprised a €1.95bn seven-year opco term loan paying 185bp over Libor, a €400m seven-year opco revolver paying 185bp, a €200m eight-year holdco revolver at 225bp, a €333.817m holdco senior term loan B at 275bp and a €333.817m senior term loan C at 325bp. In addition there is a €165.53m holdco first loss tranche paying 500bp over Libor and a €524.174m 10-year mezzanine loan paying 4% cash and 4% PIK. Bank lenders were invited to join as joint lead arrangers on €100m for 100bp, as lead arrangers on €75m for 87.5bp, as arrangers on €50m for 70pb or as managers on €30m paying 55bp.

This is the latest in a string of ultra-aggressive pricing and structural flexes in the European leveraged loan market as sponsors use heavy oversubscriptions to reduce their financing costs by lowering subordinated debt and increasing senior debt. Other deals that have done this include United Biscuits and KION. Those two deals, along with PagesJaunes, have still left some subordinated debt in place as a buffer between the senior debt and the equity. Numericable’s recent €2.8bn transaction, in which it replaced its €250m nine-year second lien tranche at 475bp and €500m 10-year mezzanine tranche at 912.5bp with a €800m nine-year term loan C at 275bp, removed the buffer altogether. Bankers said that structural flexes were becoming so aggressive, and so commonplace, that deals would soon either have to launch more senior-debt heavy structures and lower pricing, or a more bond-style bookbuilding approach adopted to pricing leveraged deals.

SASA Industrie

Target nation: France

Date announced: 05/01/07

Deal type: LBO

Acquirer(s): Weinberg Capital Partners

Total value: Unknown

Mandated arranger(s): CIC

Financing: €114m

Bookrunner CIC Credit Industriel et Commercial will launch the €114.056m senior debt package supporting Weinberg Capital Partners’ buyout of SASA Industrie. Debt is split between a €28m amortising term loan A, a €12m eight-year term loan B, a €15.7m seven-year amortising additional credit, a €5.5m seven-year amortising refinancing facility, a €16.471m 10-month bridge and a €36.385m 10-month overdraft facility. General syndication comes after a senior phase in which Banque Palatine, LCL and SG joined as joint lead arrangers on the term loans A and B, additional credit and the refinancing facility.

Telenor

Target nation: Norway

Date announced: 26/10/06

Deal type: LBO

Acquirer(s): Apax

Total value: €308m

Mandated arranger(s): CIBC World Markets and ING

Financing: Unknown

CIBC World Markets and ING have been mandated on a facility backing sponsor Apax Partners’ buyout of Telenor Satellite Services (TSS), formerly a unit of Norwegian telecoms giant Telenor. The package is set to launch in March.

Tragus

Target nation: UK

Date announced: 15/12/06

Deal type: Secondary buyout

Acquirer(s): Blackstone

Total value: €406m

Mandated arranger(s): Barclays

Financing: €343m

The £225m loan backing Blackstone’s secondary buyout of UK restaurant operator Tragus from LGV has closed oversubscribed, via bookrunner Barclays. The fund tranches closed heavily oversubscribed. Debt comprises a £70m eight-year term loan B at 250bp over Libor, a £70m nine-year term loan C at 300bp, a £15m seven-year revolver at 225bp, a £40m seven-year capex facility and a £30m nine-and-a-half year second-lien tranche at 550bp. In syndication banks lenders were offered 85bp for £20m and 65bp for £12.5m. Total net debt to EBITDA is 5.5x, while senior net debt to EBITDA is 4.5x.