Buyout firms looking to acquire larger assets through club deals may be concerned by Wind’s mixed reception in Europe, but SunGard’s jumbo financing is finally gaining traction in the US.
Momentum began to build early last week for the bank debt. By mid-week, some US$4bn in term loans was already 75% filled at 275bp over Libor and the US$1bn revolver was fully spoken for by the arrangers. The deadline for final commitments is July 22.
“This is a case of arrangers forcing the sponsors not to be greedy and do the right thing by offering the market a decent spread,” said one investor. “And it is paying off, people are liking the deal even after all the anticipation and bad press, it really shows what the market can and will do if the price is right.”
Pricing includes a step-down to 250bp if leverage falls below 4.5x. Current leverage is in the high 6x area. The B1 rated bank debt consists of a US$1bn revolver and US$3.5bn of term loans. The arrangers have also carved out a US$500m tranche, which will be split equally between euros and sterling and sold to European investors.
The arrangers will hit the road from Monday, with a US$1.25bn senior unsecured two-part fixed/floater note offering. Pricing is expected in the week of July 25.
Deutsche Bank, Citigroup, JP Morgan, Goldman Sachs and Morgan Stanley are joint bookrunners. So far the bonds have been assigned a Single B– rating. Tranche sizes are still to be decided.
The fixed-rate eight-year, non-call four features a 35% equity claw-back at year three. The floater is an eight-year, non-call two (first call 103) with a claw-back at year two of 35%.
The proceeds will be used to fund the acquisition of SunGard by Silver Lake, Bain, Blackstone, GS Capital, KKR, Providence Equity, and Texas Pacific Group. The sponsors are providing US$3.5bn of equity.