Record package for Alliance Boots

Bookrunners have launched syndication of the £9.02bn debt package backing the £11bn buyout of Alliance Boots. The deal is the largest ever European leveraged buyout. A bank meeting will be held on July 5.

Deutsche Bank, JPMorgan and Unicredit (HVB) are mandated as global co-ordinators and physical bookrunners across senior and subordinated facilities.

Barclays has been mandated as physical bookrunner of the senior facilities and bookrunner on the subordinated facility. Citi has been mandated as bookrunner on the subordinated facility. Bank of America, Merrill Lynch, RBS and Morgan Stanley have been mandated as MLA’s to underwrite the senior and subordinated facilities.

The debt backs sponsors KKR and Stefano Pessina’s buyout of Alliance Boots. Sponsors are contributing a combined £2.04bn of equity for a 59.48% stake in the business with seven of the MLA banks providing a £1.39bn “equity bridge” for a 40.52% non-voting shareholding, which will also be syndicated.

Under the terms of the equity bridge deal Barclays Bank will contribute £300m of equity for a 8.75% initial stake, BofA £200m for 5.83%, Citi £125m for 3.64%, Deutsche Bank £200m for 5.83%, JP Morgan £205m for 5.98%, RBS £100m for 2.92% and UniCredit £260m for 7.58%.

The senior debt facilities comprise a £5.05bn eight-year bullet term loan B paying 275bp over Libor (non-call 18 months then at par), a £1bn seven-year bullet Property Bridge which pays 175bp over Libor stepping up to 225bp over Libor after two years, a £400m seven-year bullet Receivables Bridge again paying 175bp over Libor stepping up to 225bp over Libor after two years, £820m of seven-year revolving credit facilities pays 200bp over Libor, and a £1bn nine-year bullet second-lien facility pays 400bp over Libor, non-call two year, then at par.

An addition £750m 10-year bullet subordinated facility pays 600bp over Libor, non-call three years then at par.

The transaction is being offered to banks and institutions with a one-stop syndication of first-lien, second-lien and subordinated facilities.

On April 24 sponsors KKR and Stefano Pessina agreed a recommended £11.1bn cash offer for the entire issued and to be issued share capital of Alliance Boots.