Spanish LBO pipeline building nicely

The Spanish LBO market is coming to life, with a string of financing mandates on offer. The auction for the tour operator arm of Iberostar, which also owns a hotel chain, has entered the final round of bidding with just four candidates left standing – Apax Partners, Carlyle Group, Bridgepoint and Vista Capital.

Iberostar is owned by the Fluxa family, which has recruited Lazard as financial adviser and SG to provide staple financing. The latter is reported to be ready to provide €600m–€650m in staple finance.

Gasmed, another family-owned Spanish business, has also recently announced its intention to sell. Gasmed supplies oxygen and equipment for hospital and private patient use. Credit Suisse First Boston is advising the family. This deal is thought to be worth less than €500m.

The secondary buyout of Dorna Promocion del Deporte, which organises and manages the commercial rights for MotoGP (the FIM Motorcycle Road Racing World Championship), is also an eagerly awaited leveraged deal.

CVC bought Dorna Promocion del Deporte, in June 1998 from Banesto for £54m but has now been compelled to sell the company as part of the EC’s regulatory clearance of CVC’s purchase of the rights to Formula One.

Through the Alpha Prema vehicle, CVC owns 86% of Jersey-based SLEC Holdings, which controls the Formula One Group. CVC initially bought a majority of SLEC from BayernLB and Bambino Holdings, which is part of the Ecclestone family trust, and then acquired 14% from JPMorgan. Lehman Brothers owned the remainder but also agreed to sell at the end of January.

Any LBO supporting the deal is likely to be in the region of €500m.

Meanwhile, market rumours indicate that Spanish bakery products company Panrico is on the verge of refinancing the €650m LBO loan it secured just last October.

Three banks are said to be talking to sponsor Apax Partners about the deal, which at only six months would be one of the quickest refinancings ever in the European market. The talk comes despite leverage of 4.6x senior net debt to Ebitda, 5x including the first loss piece and 6.3x total.

However, the October loan was a blowout that resulted in a record reverse flex of 75bp on the second-lien portion and a hefty 25bp reduction on the B/C tranches, so the sponsors may feel that demand will still exist for the deal if they can demonstrate a sufficiently strong case for early de-leveraging.

MLAs and bookrunners on the autumn deal were Caja Madrid, Goldman Sachs, ING and RBS. La Caixa joined as JLA.

Last autumn’s deal comprised a €120m seven-year term loan A at 225bp over Euribor, a €140m eight-year term loan B at 250bp, a €140m nine-year term loan C at 300bp, a €15m seven-year revolver at 225bp, a €35m seven-year capex and restructuring line at 225bp, a €50m two-year bridge to real estate disposal paying an initial 225bp, a €40m nine-and-a-half year first loss tranche paying 425bp and €110m of ten-year mezzanine at 5% cash and 5% PIK.

Apax Partners bought the bakery products company from the Costa Freda family and La Caixa.

Nachum Kaplan