Category Archives: LBO

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at 8:22am

Omers Private equity lines up financing for Civica buyout

Omers Private Equity has agreed to buy Civica, the British provider of computer software to the public sector, from 3i for £390 million. The agreement comes after a keenly fought auction that saw the Canadian buyer win out against final rival bids from Cinven and Vista.

To support the bid Omers has mandated Bank of Ireland, Credit Agricole CIB, GE Capital, and ING to arrange an all senior loan financing, market sources said. Nomura, Weil and Wyvern Partners advised Omers.

During the auction sources put leverage talk for the financing in a 4.5-5x EBITDA context.

Omers said it would now look to support the management team through organic growth and selective acquisitions. Management, led by CEO Simon Downing, will reinvest and continue to lead the business.

3i took Civica private back in 2008, in a £190 million deal backed by a £170 million senior-and-mezzanine loan. A club of banks provided the senior debt, comprising Lloyds, Bank of Ireland, NAB, and RBS. European Capital and Lloyds provided the mezzanine portion.

Civica provides specialist systems and business process services for organisations across the public sector and around the world. The firm supplies more than 2,500 organisations in the U.K., Australia, New Zealand, Singapore, Canada, and the U.S. – David Cox/Sarah Husband

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at 3:08pm

With LBOs scarce, private equity firms turn to dividend/recap deals

It’s no secret that dividend recaps are again a major theme in leveraged finance this year. Private equity firms, as usual, are the main source of dividend deals. PE-backed issuers have tapped the leveraged loan and high-yield bond markets for $19.7 billion of dividend financing in 2013 (as of April 26), including $16.9 billion of loans and $2.8 billion of bonds.

That figure is just below the $19.8 billion total recorded during the same period last year ($16 billion/$3.8 billion). For all of 2012 there were more than $60 billion of PE-backed dividend deals, a hefty amount.

Recaps have, in part, filled the hole created by a combination of lackluster LBO activity and the erratic, thin IPO market. With M&A-driven new-money deals far lagging demand for new paper from both loan and high-yield accounts, there’s excess liquidity available to finance dividends.

This analysis is part of an LCD News story, available to subscribers, that also details

  • Average yield for single-B loan issuers
  • Private equity-backed IPO issuance
  • New-issue clearing yield: LBO vs. dividend
  • LBO/Dividend deals in profile: SunGard, West Corp., Noranda
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at 12:03pm

Coinmach sets $1.17B 1st- and 2nd-lien leveraged loan package for LBO by Pamplona

A Deutsche Bank-led arranger group is providing $1.17 billion of first- and second-lien loans to back Pamplona Capital Management’s purchase of Coinmach Services, sources said. The transaction also encompasses the acquisition of another business operating in one of Coinmach’s business lines.

The transaction will include a $75 million, five-year revolver, a $770 million, 6.5-year first-lien term loan and a $325 million, seven-year second-lien term loan. The term loans will be covenant-lite, sources noted. The transaction will leverage Coinmach at 3.3x on a net first-lien basis, and 4.8x on a net total basis.

Deutsche Bank and Morgan Stanley are joint bookrunners on the first-lien facilities and are joined as lead arrangers by KeyBanc, Credit Suisse and UBS. Deutsche Bank is sole lead on the second-lien loan.

The company’s $50 million delayed-draw term loan and $725 million term loan are both due in November 2014, according to Standard & Poor’s. Plainview, N.Y.-based Coinmach in late 2009 missed interest payments on a $175 million senior bridge loan due 2015 and a $225 million subordinated bridge loan due 2015 stemming from a 2007 LBO by Australia’s Babcock & Brown, and bridge lenders RBS and Deutsche Bank eventually took control of the company. – Chris Donnelly

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at 8:46am

Europe: Adler Modemarkte buyers line up €71 million loan backing take-private bid

Commerzbank and IKB Deutsche Industriebank have been mandated to arrange a €71 million senior secured loan supporting the take-private of Adler Modemarkte, the German textile retailer.

Steilmann Holding, Bergkamen, and Exalibur are leading the bid, and a share purchase scheme has already been agreed with bluO International Affiliates for 49.96% of the shares.

The takeover will be financed by equity, and the loan may see a very limited syndication.

Adler Modemarkte is headquartered near Haibach, and generated revenue of €506.1 million and EBITDA of €35.5 million in 2012. – David Cox

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at 3:01pm

With M&A scarce (save Heinz), 1Q LBO loan volume totals unimpressive $26B

LBO loan volume

LBO activity continues to disappoint in the leveraged finance markets, especially compared to hopes of a willing institutional investor base with lots of cash to put to work.

Loan activity backing leveraged buyouts during the first quarter totaled $26 billion, and much of that comes from one deal: Berkshire Hathaway’s $28 billion acquisition of Heinz, which spawned some $11 billion in bank debt.

The quarterly LBO loan total, of course, is nothing compared to the $185 billion of overall leveraged loan volume seen during the period. The bulk of that activity, however, is refinancings, as issuers rushed to market to take advantage of historically low borrowing costs.

Looking forward, accounts report a disheartening lack of front-end LBO activity, suggesting that the second quarter of the year might be no busier than the first for M&A.

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at 1:12pm

LBO volume hits post-2007 high but pipeline remains thin

Buoyed by Berkshire Hathaway and 3G’s $28 billion take-private transaction for Heinz – the largest execution since the mega-deal era of 2006-2007 – the volume of announced LBOs in the first quarter stands at a six-year high of $78.2 billion (or $54.2 billion excluding Michael Dell and Silver Lake’s proposed $24 billion LBO for the computer maker, which remains in a go-shop period through March 22), up from $29.8 billion in the fourth quarter and $19.2 billion during the first three months of 2012.

A resurgence in public-to-private deals has propelled LBO activity in recent months. In addition to Heinz and Dell, KKR’s $3.9 billion deal for Gardner Denver pushed P2P transaction volume to a six-year high of $60.5 billion in the first quarter (or $36.5 billion sans Dell).

This analysis is part of an LCD News story, available to subscribers, that also details

  • LBO loan volume, by quarter
  • Large LBO volume
  • Average yield on B/B2 issues (non-refinancings)
  • Cost of funds for B/B2 rated LBOs
  • Average leverage of large LBOs
  • Debt/EBITDA, largest LBOs
  • .xls: Large LBO stats since 2001

 

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at 9:36am

Hostess term loan backing Apollo buyout gains on entry into trading mart

hostess logoAccounts yesterday received allocations of the $500 million covenant-lite term loan for Hostess Brands, which has advanced to a 100.5 bid after breaking for trading at 100/100.5, from issuance at 99, sources said. The seven-year loan is priced at L+550, with a 1.25% LIBOR floor. The loan is non-callable in the first two years, followed by 102, 101 call premiums in years three and four, respectively.

At 99, the loan yields about 7.12% to maturity. The yield tightens to 6.88% at the midpoint of the opening market.

Hostess, which is in the process of liquidating its assets and brands, is selling its snack-cakes business to Apollo Global Management and Metropoulos & Co. Apollo and Metropoulos’ $410 million bid for the unit was the stalking-horse bid, though according to a notice filed yesterday by Hostess with the bankruptcy court in White Plains, N.Y., the Apollo and Metropoulos bid was the “only qualified bid that was received by the debtors,” and that as a result, no auction would be held.

Prior to allocating the deal, Credit Suisse and UBS this morning added a ticking fee to the deal. It is set at zero basis points for the first 30 days, but would step up half of the drawn spread, or 275 bps, thereafter. A hearing to approve the sale is scheduled for March 19, and sources note the ticking fee was added to the deal in the instance there is an appeals process.

As reported, the arrangers last week cut pricing on the term loan, which was originally talked at L+600-625, with a 1.25% LIBOR floor and a 98.5 offer price. In addition, the loan was upsized by $50 million. The incremental debt is earmarked for general corporate purposes, which sources note could include a potential higher bid for Hostess Snacks, a reduction to the equity contribution, or a potential bid for snack-food business Drake’s.

The financing also includes a $60 million asset-based revolver. – Kerry Kantin/Chris Donnelly

 

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at 8:43am

Norway’s Beerenberg Holding inks NOK950M loan backing LBO by Segulah

Beerenberg Holding, a Norwegian oil services group, has signed a NOK950 million (€127.5 million) loan via coordinator and bookrunner Danske Bank to support its Segulah-led buyout.

Segulah is buying the firm from Hercules Capital, a Norwegian private equity firm, and management. In a statement, Segulah said management will reinvest and remain a significant shareholder in the group.

Beerenberg is headquartered in Bergenand, and is primarily active on the Norwegian continental shelf. Estimated revenue for 2012 is roughly NOK1.5 billion. – Staff reports

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at 10:47am

Private equity firms tapping leveraged loan market at record pace

Private equity firms have been taking advantage of today’s razor-thin borrowing costs in a big way.

Sponsor-backed companies racked up $81 billion in leveraged loans during the first two months of 2012, a pace that would easily top the pre-Lehman full-year record of 2007. Of course, this activity doesn’t necessarily stem from marquee LBOs. The bulk of the volume is a result of sponsors refinancing more expensive debt or, to a lesser degree in 2013, paying themselves a dividend via a leveraged loan.

But there have been buyouts. LBOs accounted for $12.5 billion in leveraged loan volume during the first two months of the year, not including the jumbo loans expected to back the Heinz and Dell buyouts (those credits have yet to hit market). While this LBO loan activity tops the pace seen in the past few years it will need to pick up steam to match the pre-crises record of 2007 ($177 billion).

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at 1:18pm

SMCP sale heads to final round in busy French buyout market

Banks and sponsors are working towards a month-end final bid deadline for the sale of SMCP by L Capital (LVMH’s investment group), with upwards of three sponsors vying to buy the fashion company. The deal comes at what is turning out to be a busy time for the French market, with several buyouts under consideration.

Eurazeo, Carlyle, and KKR are among the final bidders for SMCP, according to market sources. The French fashion group’s brands include Maje, Sandro, and Claudie Pierlot and the firm is expected to attract a price tag of €650 million. As well as private equity the sale has attracted interest from trade buyers, sources add.

SMCP is not the only retail-linked firm on the block. Elsewhere Lazard and Messier Maris are mandated to advise Apax and LBO France on a potential sale of Maisons du Monde, the furniture chain. The duo bought out the firm back in 2008 in a deal supported by a €255 million senior-and-mezzanine debt financing. Early talk gives the firm an enterprise value of least €700 million, although discussions are said to be at a very early stage. Meanwhile, Charterhouse is looking at a sale of Nocibe, the perfume retailer it bought out in 2006 which completed a loan amend-to-extend in July last year.

Among more advanced deals away from retail, Cinven is in discussions with banks about a partial refinancing of its all-equity acquisition of Prezioso Technilor, the coatings and insulation services group, agreed in June last year. The private equity firm is understood to be looking to add roughly €150 million of debt, and an MLA-heavy line up is expected on a loan with a residual sell-down requirement.

These deals come as work continues on what promise to be some of the larger buyouts of the year. Most notably, books are out on Charterhouse’s sale of catering group Elior, which could bring a €4 billion-plus buyout.  Elsewhere, Eurazeo is mulling options for Elis, the French launch services group it bought in 2007 from PAI Partners for €2.28 billion. – David Cox/Sarah Husband