Tank & Rast tests infra market

With lenders waking up to the reality that turmoil in the leveraged markets is having a real and sustained impact on the wider loan market, last week the infrastructure space received renewed liquidity tests with the launch of Autobahn Tank & Rast and the second phase of syndication for National Grid Wireless (NGW).

Of the two deals, Tank & Rast looks by far the most challenging with a senior leverage of 10x rising to 11x through the structure. Terra Firma is selling 50% of the German motorway service stations operator to RREEF Infrastructure, a US-based investment vehicle owned by Deutsche Bank, with Barclays, RBS, SG and UBS arranging the deal.

Debt totals €2.27bn and with the European fund bid for primary assets thin to non-existent the package is targeted primarily at banks. The facilities have gone out with a €1.8bn seven-year term loan A paying 175bp for the first five years rising to 195bp, a €250m seven-year capex loan and a €20m seven-year working capital line. This leaves a €200m eight-year second-lien piece for funds priced at 400bp rising to 425bp after five years.

Bank lenders are being invited in on tickets of €75m for 100bp, €50m for 80bp or €30m for 60bp. Fund lenders will receive an OID dependent on demand.

The leads are hoping that – while a European deal of this size in the leveraged market is impossible in the present environment – the infrastructure sector will prove to be a more stable part of the market.

Motorway service station deals have been difficult sales in the past as investors have questioned whether the sector pushes the definition of infrastructure too far. But taxonomy issues aside, investors agreed that Tank & Rast is a good business and as it generates much of its revenues from predictable petrol sales it contains elements of the type of profile that infrastructure investors require.

But while bankers away from the deal agreed that the infrastructure banks were still active in booking assets, it is clear that they are aware of the ongoing market repricing of risk and even at the height of a bull market, an 11x levered asset in this sector would be a challenge.

With torrid conditions in the leveraged market unlikely to improve soon and a wider loan market that can at best be described as nervous, by the close of the week there was considerable scepticism about the ability of a deal of this size and leverage to clear the market. Furthermore, comparisons with NGW are not helpful as that facility is paying a higher fee for a lower margin in a sector that is preferred by many investors.

But while few think that the deal will prove anything but difficult, the launch is still an opportunity to gauge demand in the infrastructure space and provide a reference point for future pricing and structures.

Indeed, given that the structure may well come to be seen as a template for a classic top of the market deal, launch may be the only option as the time when large scale demand for this type of structure will return is likely to be counted in years rather than months.

• Matthew Vickerstaff, global head of infrastructure and asset based finance at SG, has relocated from Paris to New York. Vickerstaff will continue to manage the global business line from New York and report to the global heads of capital raising and financing Jean-Luc Parer and Olivier Khayat. Locally he will report to Bill Schmid, head of the coverage, capital raising and financing division for the Americas. Yves Lallemand remains as deputy global head of infrastructure and asset based finance, based in Paris.

VTB Bank Europe has hired Oleg Pankratov as head of the newly-formed infrastructure capital group. Pankratov will be based in London and will be responsible for building and managing VTB groups’ infrastructure capital capabilities. The group will actively pursue infrastructure financing and acquisition opportunities in Russia and the CIS. Pankratov joins VTB from Merrill Lynch where he was an MD in the structured debt and capital group. In his new role he will report to Steve Thunem, head of global markets.

• Matthew Vickerstaff, global head of infrastructure and asset based finance at SG, has relocated from Paris to New York. Vickerstaff will continue to manage the global business line from New York and report to the global heads of capital raising and financing Jean-Luc Parer and Olivier Khayat. Locally he will report to Bill Schmid, head of the coverage, capital raising and financing division for the Americas. Yves Lallemand remains as deputy global head of infrastructure and asset based finance, based in Paris.