The €1.9447bn debt package backing Wendel Investissement’s buyout of French building materials manufacturer Materis has finally launched through mandated lead arranger BNP Paribas. LBO France is selling the company.
The mandate was awarded in January but only after a prolonged and hostile bidding process among several banks. The trio that had backed Wendel’s original bid for Materis – Goldman Sachs, RBS and SG – walked away from the deal when Wendel allowed BNP Paribas and Calyon to submit bids even though the original backers had assumed that the awarding of the mandate would be a simple formality.
The fact that the two French banks then submitted what the others deemed to be extremely aggressively priced bids only added to the furore. Calyon, too, later abandoned the deal, leaving BNP Paribas as the sole bank.
Despite the heated arguments surrounding BNP Paribas’s aggressively priced deal, the structure which has emerged is aggressive, but not shockingly so in today’s market.
Senior debt comprises a €300m seven-year term loan A at 225bp over Euribor, a €399.4m eight-year term loan B at 250bp, a €425.3m nine-year term loan C at 300bp, a €125m seven-year revolver at 200bp, a €150m seven-year capex facility at 225bp and a €145m seven-year borrower base facility priced at 175bp over Euribor. Pricing on the latter reflected the superior security of the tranche, which has a first pledge on receivables.
Subordinated debt comprises a €140m second-lien tranche paying 500bp and a €260m mezzanine, pricing on which has not been disclosed.
Banks have been invited on €100m with a €60m target final hold for 110bp. A 70% carve-out of the B and C tranches has been pre-allocated to institutional investors.
BNP Paribas insisted in January that the deal was not overly aggressive and the bank retained its confidence in the deal’s structure and the quality of the credit.
“We won the mandate in January with these terms, which at the time other banks considered to be very aggressive,” said Charlotte Conlan, head of leveraged syndications at BNP Paribas. “We were highly confident in the quality of the credit and with ever stronger market sentiment the terms are clearly attractive to bank and fund investors alike. Materis is a great company with a loyal investor following and can also demonstrate strong current trading.”
A bank meeting was held in Paris last Thursday, which was well attended and received a positive response. A general syndication is expected to follow.
Materis makes speciality chemicals for the construction industry, including decorative paints, mortar, calcium aluminates and adjuvants for concrete and cement. Annual sales are just under €1.5 billion.
Originally part of Lafarge, LBO France acquired Materis in 2003 in a secondary buyout from CVC Capital Partners, Advent International and Carlyle.
That deal was backed by a €965m leveraged loan, which was increased by a €120m add-on in November 2004. LBO France was going to sell the company to Eurazeo but the sponsor pulled out of the deal late last year for undisclosed reasons and Wendel was granted exclusivity to buy Materis early this year.