LBO Syndications arranged in November


Target nation: Germany

Date announced: 20/10/06

Deal type: LBO

Acquirer (s): Nycomed (Nordic Capital, CSFB Private Equity and Blackstone)

Total value: €5.7bn

Mandated arranger (s): Nordea, SEB Merchant Banking, DnB Nor, Credit Suisse, Citigroup, Morgan Stanley and Goldman Sachs

Financing: As below

Nycomed’s €5.7bn acquisition-related loan has been structurally flexed in an effort to overcome resistance to the previous all-senior structure from sub-underwriters.

By introducing a €425m second lien tranche, bookrunners Credit Suisse, Citigroup, Morgan Stanley and Goldman Sachs hope to allay some of the concerns caused by the patent expiration on one of acquisition target Altana’s key products. The new tranche, which represents approximately half a turn of leverage, reduces the A, B and C tranches by equal amounts. The second lien pays 525bp and can only be taken out at a premium of 101 in the first year. The change should bolster the confidence of the fourteen banks who are currently credit approved on the deal, but who have concerns about their prospects in selling down their positions in general syndication. As funds are able to play in the second lien, banks’ target holds can now be reduced from the €100m originally requested to their preferred level of €75m. The reduced ticket means that the general syndication in January is likely to be a very limited affair. The fund carve-out is already oversubscribed.

Further comfort will be taken from the fact that the leads are now preparing full due diligence on Nycomed for use in the general syndication, which had hitherto been lacking.

The flex appears to have been welcomed by investors. “The risk reward profile is now spot on. The leads pushed this one too far to begin with, this is now the right structure,” said one investor.

Altana’s patent for Pantoprozole, a drug used in the treatment of the oesophagus and gastric or duodenal ulcers, expires on May 2009 in Europe and on 31 December in the US. Thereafter, competition from generic drugs manufacturers will effectively remove Altana’s income stream from the drug, currently representing around 30% of total earnings.

The leads originally wanted to avoid including subordinated debt as the plan to rapidly de-leverage the business could lead to an inverted capital structure later. Debt now comprises a €1.61bn seven-year term loan A at 200bp over Euribor, a €1.2075bn eight-year term loan B at 250bp, a €1.2075bn nine-year term loan C at 300bp, a €250m seven-year revolver at 200bp, a €450m seven-year licensing facility at 200bp and the €425m second lien piece. Leverage is 4.9x net debt to EBITDA. There is also an unsyndicated €550m bridge to asset disposals which should remain in place for six months. In senior syndication, sub-underwriting joint lead arranger will receive 135bp for their €75m target holds. Nordea, SEB Merchant Banking and DnB Nor joined as mandated lead arranger in an early-bird phase. Nycomed is paying €5.8bn Altana on a cash and debt free basis.

BSN Medical

Target nation: Germany

Date announced: 24/02/06

Deal type: LBO

Acquirer (s): Montagu Private Equity

Total value: €1.03bn

Mandated arranger (s): JP Morgan

Financing: €80m add on

BSN Medical is in the market with a €80m add-on to its €755m leveraged financing of earlier this year that backed Montagu Private Equity’s buyout of the company, via bookrunner JPMorgan. The add-on, which is being added to the deal’s B tranche, will fund the borrower’s acquisition of France’s Cognon-morin. Banks are not offered any fee.

The original deal, the pricing on which was flexed down 25bp across the B and C tranches after an oversubscription, comprised a €150m seven-year term loan A at 225bp over Euribor, a €167.5m eight-year term loan B at 225bp, a €167.5m nine-year term loan C at 275bp, a €50m seven-year revolver at 225bp and a €20m seven-year acquisition facility. Subordinated debt was split between a €65m nine-and-a-half-year second lien tranche at 500bp and a €135m 10-year mezzanine tranche, which has yet to price.


Target nation: France

Date announced: 08/09/06

Deal type: LBO

Acquirer (s): AXA Private Equity

Total value: €130m

Mandated arranger (s): SG

Financing: €118m

The €118m debt package supporting the secondary buyout of Eliokem has closed oversubscribed, via mandated lead arranger SG. AXA Private Equity is buying the French chemical firm from Little John, a US buyout firm. Senior debt is split between a €18.2m seven-year term loan paying 225bp over Libor, a €27.4m eight-year term loan B at 262.5bp, a €27.4m nine-year term loan C at 312.5bp, a €10m seven-year revolving paying 225bp drawn and a €15m seven-year Capex facility paying 225bp. In addition there is a €20m 10-year mezzanine loan paying 4.5% cash and 5.5% PIK. Total net debt to EBITDA is 4.5x, while the senior ratio is 3.5x. Lenders were invited to join on €15m for 80bp or €10m for 70bp.


Target nation: France

Date announced: 19/10/06

Deal type: LBO

Acquirer (s): AXA Private Equity, Barclays Private Equity, Natexis Industrie ICG

Total value: €310m

Mandated arranger (s): Natixis

Financing: €280m

Gerflor is out with a €280m debt package backing AXA Private Equity’s buyout of the company from PAI, through bookrunner BNP Paribas. Natixis joined as mandated lead arrange ahead of syndication. The deal comprises €215m of senior facilities, €20m second lien and €45m mezzanine. Gerflor was last in the market with a €155m all-senior recapitalisation facility, via mandated lead arranger BNP Paribas. That deal backed the recapitalisation of the flooring manufacturer by sponsors PAI, CDC Enterprises, Natexis Industrie and ICG. A single ticket of €7.5m is offered for a 45bp fee. Mezzanine from the original structure has been rolled over.

Grandi Navi Veloci

Target nation: Italy

Date announced: 10/11/06

Deal type: LBO

Acquirer (s): Investitori Associati

Total value: Undisclosed

Mandated arranger (s): Banca Intesa and Mediobanca

Financing: €550m

Cruise and ferry operator Grandi Navi Veloci has launched a €550m of secured debt facilities to finance Investitori Associati acquisition of the company from Permira and the Grimaldi family. Banca Intesa and Mediobanca are bookrunners, while Gruppo Capitalia and UBM joined as mandated lead arranger. Proceeds will also refinance debt and be used for general corporate purposes.

The €475m of senior debt comprises a €200m seven-year term loan A priced at 175bp over Euribor, a €130m eight-year B loan at 225bp, a €130m nine-year C loan at 275bp and a €15m seven-year revolver at 175bp. The €80m nine-and-a-half-year second lien facility pays 450bp over Euribor. Arrangers can join on €40m, co-arrangers on €25m and banks can participate in the second lien facility for a €5m commitment. Grandi Navi Veloci had a total turnover of €243m in 2005.

United Biscuits

Target nation: UK

Date announced: 25/10/06

Deal type: LBO

Acquirer (s): Blackstone and PAI Partners

Total value: £1.6bn

Mandated arranger (s): Barclays, Goldman Sachs and JPMorgan

Financing: £1.45bn

The £1.45bn loan backing Blackstone and PAI’s secondary buyout of United Biscuits is getting a strong response for the market and heading for a blowout. Bookrunners are Barclays, Goldman Sachs and JPMorgan. 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 – have 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 fund 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 nine-and-a-half year second lien tranche at 450bp over Libor and a £250m 10-year mezzanine tranche.

Senior net debt to EBITDA is 4.5x, rising to 5.4x through the second lien debt and 6.7x 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 five-and-a-half 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 five-and-a-half year revolver.

Source: IFR Loans/EVCJ