CVC Capital Partners has structured one of Europe's largest buyouts since the summer credit crunch with the €2.5bn ($3.5bn) recommended bid for a listed Dutch chemicals company set to be one of the biggest deals to use major debt funding since the downturn.
CVC is paying $2.2bn for Euronext-listed Univar's equity, plus a further $1.3bn in assumed debt which the company already holds.
To pay for the deal, CVC is putting in about one third of equity into the transaction, valued at $1.19bn.
Bank of America and Deutsche Bank have underwritten $1.25bn in senior secured term loans, a $510m asset-based revolving credit line and $600m in senior subordinated notes, according to credit ratings agency Standard & Poor's.
CVC's equity contribution amounts to about one third of the entire enterprise valuation of the company.
A spokesperson for S&P rated the financial structure of the company as "very agressive," saying its financial structure stood at debt to earnings before interest, tax, depreciation and amortisation of about 6.5 times.
Sources said the banks would soon be coming to market to try to syndicate the debt portion of the transaction to institutional investors, but that the outlook for their success was uncertain.
A credit source said this deal was on the margin of banks' tolerance levels for underwriting large deals at present. He said: "Large transactions involving more than €1bn of debt are extremely difficult to finance in the European market since individual banks are unwilling to underwrite more debt than this at the current point in the cycle."
CVC offered €53.50 per share for the company in August amid analyst speculation that it would lower its bid in light of a change in credit market sentiment reducing its access to debt capital.
The tender period ends on September 19 at 13.00 GMT with the offer conditional on CVC gaining at least 95% of capital, and a possibility to cut this to 80%.
Dutch shareholder HAL Holding, which owns approximately 26.6% of Univar's share capital, has already committed to tender its shares to CVC, in the absence of any offer exceeding €57.50 a share.
Source: efinancialnews.com
1 Comment:
It sure is a shaky credit market.
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