Inter taps SoftBank 08 Audit probe derails China IPOs 09 India loosens funding rules 10
For daily news stories
@ visit http://www.ifre.comSeveral other banks have
expressed interest in the
business but US banks had
hoped merely to pick up client
accounts. The French bank,
however, is prepared to pay a
sum to Deutsche for the
technology in addition to taking
on the business.
4HEû&RENCHûBANKSûlNANCEû
DIRECTORû,ARSû-ICHENILûTOLDûANALYSTSû
at its second-quarter results
presentation last Wednesday: “We
anticipate that phasing of transfer,
which can take time, should be
lNALISEDûINûENTIRETYûBYûTHEûSUMMERû
of next year.”
,ASTûYEARû$EUTSCHEûMADEû
€1.96bn revenues from equities
sales and trading, including prime
brokerage. That makes it similar
in size to BNPP, which last year
made €2bn from this activity.
(OWEVER ûINûTHEûlRSTûSIXû
months of this year Deutsche’s
equities trading revenues fell by
a quarter to €837m.
Deutsche is also looking to
sell its equities derivatives
positions as part of its
RESTRUCTURINGû#ITIGROUPûHASû
been cited as a potential buyer
of some of these assets.
Four years ago BNPP did a
similar customer referral deal
WITHû2"3 ûAGREEINGûTOûTAKEûONûITSû
transaction services clients
when the UK bank pulled out of
that business outside the UK and)RELAND (^)
Asahi brews jumbo
bridge take-out
Loans Banks eye opportunity to refinance ¥1.2trn loan
BY WAKAKO SATO, PRAKASH
CHAKRAVARTI
Japanese and international
banks are showing strong
INTERESTûINûTHEûlNANCINGûTHATû
will take out a ¥1.2trn
(US$11.1bn) bridge loan that is
funding ASAHI GROUP HOLDINGS’
proposed acquisition of the
Australian operations of
!NHEUSER
"USCHû)N"EV
The Japanese beer and soft
drink giant is in discussions with
banks on a longer-term take-out
of the bridge Sumitomo Mitsui
Banking Corp provided in support
of the A$16bn (US$11.3bn)
PURCHASEûOFû!"û)N"EVûSUBSIDIARYû
#ARLTONûû5NITEDû"REWERIES
,ENDERSûAREûEYEINGûTHEû
opportunity to get a piece of the
action on the longer-term take-
out, the bulk of which is expected
to be in the form of a loan.
h3-"#ûDIDûWELLûTOûBAGûTHEûSOLEû
mandate on the bridge. However,
the take-out will provide
opportunity for other lenders to
showcase their strength and
support,” said one banker at an
international lender.
“The huge size of the debt
means that the take-out will
have to be syndicated.”
The bridge is denominated in
yen, but the take-out could come
in other currencies depending
on what terms Asahi is able to
extract from lenders.
“We may have opportunities
if the loan is denominated in
!USSIEûDOLLARSû)TûALSOûDEPENDSûONû
PRICINGû)TûWOULDûBEûHARDûIFûITûISû
priced at corporate loan level,”
said another banker at a non-
Japanese bank.
HIGH SPIRITS
The strong interest from lenders
is not surprising given the high-
PROlLEûNATUREûOFûTHEûDEALûANDû
the potential for ancillary
business. Asahi’s proposed
acquisition will catapult it into
third position among the
world’s biggest brewers behind
!"û)N"EVûANDû(EINEKEN
The purchase will increase the
Ebitda of Asahi’s Australian
business to about ¥100bn,
adding to the ¥200bn and
¥100bn of Ebitda that its
Japanese and European
businesses generate,
respectively.
)TûWILLûALSOûLEADûTOûANûINCREASEû
in Asahi’s net debt/Ebitda to
over four times in the short
term and a deterioration in
OTHERûlNANCIALûMETRICSûSUCHûASû
its debt-to-equity and
capitalisation ratios. Following
the announcement of the
acquisition, Moody’s placed
Asahi’s Baa1 ratings under
review for downgrade.
“This large, mostly debt-
lNANCEDûACQUISITIONûWILLû
SIGNIlCANTLYûRAISEû!SAHISûlNANCIALû
leverage,” said Moody’s senior
CREDITûOFlCERû-OTOKIû9ANASE
According to the rating agency,
the acquisition will almost
double Asahi’s total debt of ¥1trn
at the end of 2018, while the
acquired business’s revenue will
account for only about a 10th of
the group’s revenue.
The extra leverage means
capital markets opportunities
will arise as Asahi looks to
IMPROVEûITSûlNANCIALSû)TûHASû
already announced plans to raise
¥300bn through equity and
subordinated debt, and has
completed the shelf registration
for issuance of common shares
(for up to ¥200bn).
Should the take-out loan be
syndicated before the end
of the year, it would also lift
sagging loan volumes in Japan.
)NûTHEûlRSTûSIXûMONTHSûOFû û
Japan transacted 966 loans for a
total of US$113bn, a 7.3% year-
ON
YEARûDROP ûACCORDINGûTOû,0#û
data. (^)
Tradeweb data. The €860m May
2026 4.50% notes were also well
bid and climbed nearly four
points, to 107.90 bid.
2ElNITIVSû53BNûû
November 2026 unsecured bond
was trading at 111.75 on August
1, up from 104.75 on July 25,
and a US$1.25bn 6.25% May
2026 secured note traded as
high as 108.25, up from 104.7 in
the same time.
All four bonds are callable
from November 2021 and are
TRADINGûFARûABOVEûTHEIRûlRSTûCALLû
prices. While they could be
repaid through make-whole
premiums, this would come at a
HIGHûCOSTûFORû,3%
"UTû#OVENANTû2EVIEWûANDû
8TRACTû2ESEARCHûANALYSTSûWARNEDû
that the looseness of an equity
claw provision - which allows
the issuer to redeem up to 40%
of each bond with the proceeds
of an equity offering - could
allow some of the debt to be
redeemed at a cheaper rate. The
analysts said this meant take-
out prices could be based on a
blend between the equity claw
and the make-whole.
NEW CAPITAL STRUCTURE?
Bankers and investors are
SPECULATINGûWHATû2ElNITIVSû
new capital structure will look
like, as the company transforms
into an investment-grade credit.
The combined company will
have a corporate-style debt
STRUCTURE ûANDû,3%SûCREDITûRATINGû
OFû3INGLEû!ûBYû3TANDARDûû0OORSû
and A3 by Moody’s will allow it to
raise money at a fraction of the
price of its existing leveraged debt.
!NOTHERûSMALLERûPRE
)0/ûLOANû
could be put in place to support
the issue of new shares for the
acquisition, and the company
could also take out a revolving
credit facility to backstop
commercial paper issuance with
relationship banks.
Moody’s said it was likely to
DOWNGRADEû,3%ûBYûAûNOTCHûDUEûTOû
“extensive” challenges linked to
THEûACQUISITIONû)TûALSOûSAIDûITûWASû
REVIEWINGû2ElNITIVûFORûANûUPGRADE
!FTERûTHEû,3%ûTRANSACTIONûISû
COMPLETED û4HOMSONû2EUTERSûANDû
the Blackstone-led consortium
"LACKSTONE û3INGAPORESû')#ûANDû
THEû#ANADAû0ENSIONû0LANû
)NVESTMENTû"OARD ûWILLûTOGETHERû
own an economic interest of
AROUNDûûOFû,3%ûBUTûLESSûTHANû
30% of total voting rights.
2ElNITIVSûORIGINALûBUYOUTû
WASûlNANCEDûBYûAû53BNû
loan and bond package. The
loans were split between a
US$6.5bn facility and a
US$2.75bn-equivalent euro-
denominated facility.
Additional reporting by
Claire Ruckin, Prudence Ho and
Yoruk Bahceli.