IFR 03.7.2020

10 International Financing Review March 7 2020

Top news

Casualty list grows in US loan market

„ Loans Nearly US$14bn of deals pulled as a result of volatility caused by coronavirus

BY AARON WEINMAN

Companies seeking to slash

BORROWINGûCOSTSûONûNEARLYû

US$14bn of leveraged loans

pulled transactions from the

market last week, as investors

pushed back on opportunistic

deals amid worries over the

coronavirus epidemic stunting

economic growth.

Pharmaceutical companies

BAUSCH HEALTH, PHARMACEUTICAL

PRODUCT DEVELOPMENT and

ALKERMES, as well as sales and

MARKETINGûlRMûADVANTAGE

SOLUTIONSûANDû"RITISHûTECHNOLOGYû

lRMûMICRO FOCUS withdrew their

loans from the market last week.

Print and digital marketing

lRMûTHRYV also postponed an

53MûLOANûTHATûWASûOFFERINGû

INVESTORSûAûJUICYûBPûOVERû

Libor. The borrower was looking

TOûRElNANCEûDEBTûANDûFUNDû

acquisitions.

The decisions follow similar

MOVESûFROMûSAFETYûCOMPANYû

MINIMAX VIKINGûGASûOUTlTûMESSER

GROUPûANDûENERGYûCOMPANYû

NORTHRIVER MIDSTREAM, which

COLLECTIVELYûYANKEDûROUGHLYû

53BNûFROMûSYNDICATIONûTHEû

previous week.

These borrowers, which

looked to take advantage of

favourable credit conditions

LASTûMONTHûTOûRElNANCEû

existing loans, were

BLINDSIDEDûBYûTHEûGROWTHûOFû

the viral outbreak and its

impact on the corporate debt

markets. Facing less

favourable rates and terms

THANûEXPECTEDûTHEYûCHOSEûTOû

remove the transactions and

await a more receptive

market.

h-OSTûOFûTHEû;DEALS=ûAREûGETTINGû

pushed because pricing has to

reset itself, and the market has

TOûDETERMINEûWHEREûYIELDSû

SHOULDûBEvûSAIDû2YANû+OHANûAû

PORTFOLIOûMANAGERûATû7ESTERNû

Asset Management.

"AUSCHû(EALTHûFORMERLYû

known as Valeant

Pharmaceuticals, withdrew a

US$5.14bn term loan intended

TOûRElNANCEûEXISTINGûLOANSûANDû

PAYûBACKûOUTSTANDINGûBONDSû

PPD was seeking a US$4.1bn

RElNANCINGûDEALûANDû-ICROû

Focus was shopping a two-part

US$1.4bn transaction to

RElNANCEûAûLOANûDUEûINû

"IOPHARMACEUTICALûCOMPANYû

Alkermes was in the market

with a US$350m Term Loan B

RElNANCINGûBEFOREûPULLINGûTHEû

DEALûONû&RIDAY

Advantage Solutions

WITHDREWûITSû53BNûDUAL

CURRENCYûTERMûLOANû"ûTHATûITû

intended to use to address

upcoming debt maturities.

The deal comprised a

53BNûlRST

LIENû4,"ûANDûAû

53M

EQUIVALENTûlRST

LIENû

loan in euros.

4HEûSIX

YEARûDEBTûWASûOFFEREDû

ATûBPûOVERû,IBOR%URIBORûWITHû

Aûû/)$ûANDûûSOFT

CALLû

protection for six months.

The virus, which has spread

across continents, pushed

leveraged borrowers to the

sidelines after a tumbling stock

market caused companies and

lenders to reassess their appetite

for risk.

Loan funds saw a US$2.3bn

withdrawal last week,

SIGNIlCANTLYûUPûONûTHEû

53MûTHATûWASûPULLEDûOUTû

INûTHEûWEEKûENDINGû&EBRUARYûû

according to Lipper. It was the

seventh consecutive week of

OUTmOWS

GOING LOWER

The US Federal Reserve cut interest

RATESûBYûBPûTOûAûTARGETûRANGEûOFû

nûONû4UESDAYûANû

Lenders join Thai shopping spree

„ Loans Berli Jucker eyes record US$10bn loan to buy Tesco’s Asian business

BY CHIEN MI WONG,

PRAKASH CHAKRAVARTI

4HAILANDSûLOANûMARKETûISû

back with a bang, with some

OFûTHEûCOUNTYSûRICHESTû

TYCOONSûINûTALKSûFORûMULTI

BILLIONûDOLLARûlNANCINGSûTOû

support bids for the Asian

operations of supermarket

chain Tesco.

#HAROENû3IRIVADHANABHAKDISû

BERLI JUCKER is on the acquisition

TRAILûAGAINûFOURûYEARSûAFTERûITSû

PURCHASEûOFû"IGû#ûHYPERMARKETSû

&ELLOWûTYCOONSû$HANINû

Chearavanont through his

mAGSHIPûCHAROEN POKPHAND GROUP

and Tos Chirathivat via the

CENTRAL GROUP are also in the

hunt.

All three groups are seeking

JUMBOûlNANCINGSûTHATûWOULDû

RANKûAMONGû!SIASûBIGGESTû

SYNDICATEDûLOANSûANDûSETûAûRECORDû

in Thailand.

"ERLIû*UCKERûALREADYûHASûTHEû

support of around a dozen

banks for a 24-month

53BNnBNûBRIDGEûLOANû

ANZ, Bank of China, BNP Paribas,

Kasikornbank, Maybank, Mizuho

Bank, Natixis, OCBC Bank, Siam

Commercial Bank, Standard

Chartered Bank, Sumitomo Mitsui

Banking Corp and United

Overseas Bank have won the

mandate for the borrowing.

The battle for the Asian

OPERATIONSûOFû"RITAINSûBIGGESTû

retailer is an enticing

prospect for lenders in an

OTHERWISEûSLOWûYEARûWITHû

DEALûmOWûDENTEDûBYûSLOWINGû

economic growth, the US-

China trade dispute and,

MOSTûRECENTLYûTHEû

UNCERTAINTYûAROUNDûTHEû

coronavirus outbreak.

h%VERYONEûISûFOCUSEDûONûTHEû

Tesco deal as the Asian loan

market has not seen a

transaction of this size and

PROlLEûINûAûWHILEvûSAIDûAû

Singapore-based banker close to

the situation.

3OMEûLENDERSûAREûLIKELYûTOû

run multiple deal trees and

COULDûlGUREûONûTHEûLOANSû

supporting CP and Central,

ensuring a role for banks

regardless of which bidder

emerges victorious.

h4HISûISûANûEXTREMELYû

competitive situation and

the requirement is also quite

big. The more the merrier,”

said another senior loans

banker in Singapore, who is

involved in one of the

potential loans.

Some banks are

apprehensive about the

amount of debt the bidders

are looking to take on, even if

4ESCOSûOPERATIONSûINû!SIAûAREû

some of the most prized assets

on offer. The three bidders are

EXPECTEDûTOûPAYûAûPREMIUMûTOû

WINûTHEûRACEûWITHûTHEûlNALû

PRICEûPOTENTIALLYûREACHINGû

53BNnBNûnûMOREûTHANû

25 times earnings.

h)TûWOULDûBEûINTERESTINGûTOû

see whether these companies

would be able to stomach this

level of debt given that the

leverage levels are so high,”

SAIDûTHEûlRSTûBANKERûINû

Singapore.

In the six months to August

û4ESCOSû4HAIûANDû-ALAYSIANû

businesses together generated

sales of £2.56bn (US$3.3bn) and

OPERATINGûPROlTûOFûaM

Tesco is set to make a decision

on the sale this month. The

"RITISHûCOMPANYSû!SIANû

operations comprise some 2,

supermarkets and convenience

stores in Thailand, where it is

ONEûOFûTHEûBIGGESTûRETAILûPLAYERSû

under the Tesco Lotus brand,

ANDûûSTORESûINû-ALAYSIA

4 IFR Top news 2323 .p 4 - 14 .indd 10 06 / 03 / 2020 19 : 26 : 35