For this, they will earn a 7.5bp underwriting fee and 12.5bp upfront on the senior opco tranche, a 10bp underwriting fee and 15bp upfront on the senior bidco debt, a 20bp underwriting fee and 35bp upfront on the senior holdco debt and a flat 75bp upfront on the junior debt. Some institutions have also been approached in these phases to join the junior debt.
The deal is split into five components. The senior opco tranches comprise a £700m 18-month capex facility and a £200m 18-month working capital facility. Both tranches pay 40bp over Libor in the first year, rising to 45bp over Libor from the second year onwards.
The senior bidco tranche is a £1.1bn 18-month term loan, which acts as a bridge to a whole business securitisation (WBS). Pricing on this tranche is 50bp over Libor in year one and 60bp over Libor thereafter.
Senior holdco debt comprises a £625m five-year term loan and a £210m five-year capex line. The margin on these two tranches ratchets along a ratings grid ranging from a high of BBB– to a low of BB+.
In years one to three, pricing is 110bp–125bp over Libor, in year four it is 120bp–140bp over Libor and in year five it is 130bp–160bp over Libor.
The junior holdco tranche is a £835m seven-year term loan paying 375bp over Libor in years one to three, 400bp over Libor in years four and five, and 500bp over Libor in years six and seven.
Finally, there is £270m of debt earmarked for the unregulated elements of the business, split into term and revolving elements and with a three-year maturity. Pricing is undisclosed.
A general phase is planned for early in the New Year. The acquisition is subject to regulatory approval, which, if granted, will not happen until December, so the loan will not launch to general syndication until very late this year at the earliest and possibly early next year. Kemble Water is the acquisition vehicle through which Macquarie will effect the acquisition.
At £8bn, the deal is the largest buyout in UK history. Macquarie saw off bids from Guy Hands’ Terra Firma and a joint bid from the Qatar Investment Authority and UBS global infrastructure fund