IFR 03.7.2020

International Financing Review March 7 2020 11

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Virus hits leveraged

loans in Europe

„ Loans Launches put on hold and terms renegotiated

BY CLAIRE RUCKIN

4HEûCORONAVIRUSûHASûHITû%UROPESû

leveraged loan market as

opportunistic deals are

CANCELLEDûSYNDICATIONSûAREû

DELAYEDûONûUNDERWRITTENû

transactions and bankers

renegotiate the terms being

offered to sponsors on new deals

as pricing widens across the

board.

2ElNANCINGSûREPRICINGSûANDû

recapitalisations have been

pulled prior to launch, putting a

halt to deals that have

DOMINATEDûACTIVITYûINû%UROPESû

leveraged loan market so far this

YEAR

h7EûHAVEûAûREALûISSUEûONûOURû

HANDSûRIGHTûNOWû%VERYTHINGû

THATûISûNOTûCOMPLETELYûESSENTIALû

has been pulled,” a sponsor said.

"ANKERSûAREûALSOûDELAYINGûTHEû

selldown of underwritten deals

THATûAREûYETûTOûLAUNCHûHOPINGû

the price disruption on deals in

SYNDICATIONûWILLûSETTLEûDOWN

!ûõBNûDEBTûlNANCINGû

BACKINGû,ONESTARSûACQUISITIONûOFû

BASFSûCONSTRUCTIONûCHEMICALSû

business was due to be brought

TOûMARKETûINûTHEûlRSTûWEEKûOFû

March. Although some of the

loan has been pre-sold, the

TIMETABLEûFORûSYNDICATINGûTHEû

MAJORITYûOFûTHEûTERMûLOANûHASû

BEENûDELAYEDûUNTILûTHEREûISûAû

clearer sense of where the

market is pricing.

A €520m loan backing

!RDIANSûACQUISITIONûOFû&RENCHû

FOODûCOMPANYûCERELIA was due to

launch in March but could be

postponed too.

"ANKSûAREûINûNOûHURRYûTOûLAUNCHû

ANûUPûTOûõBNûlNANCINGûTOûBACKû

#INVENûANDû2!'û&OUNDATIONSû

acquisition of THYSSENKRUPPSû

elevators division. It was expected

in the second quarter, but could

now come in the third.

BACK TO THE TABLE

Bankers are in talks with

sponsors about renegotiating

TERMSûOFFEREDûONûlNANCINGSûTOû

BACKû-!ûSITUATIONSûINûAUCTION

h!NYTHINGûINûPROCESSûWILLûBEû

lXEDûTOûMARKETû)FûWEûHAVENTû

SIGNEDûITûWEûWILLûPROBABLYû

amend terms and increase

pricing,” a senior banker said.

Final bids are due on March 13

ONûAûõBNûSALEûOFû#AP6ESTSû

French nuclear medicine

provider CURIUM. Banks are

expected to offer the last

remaining bidders Bain, CVC

and Nordic Capital different

lNANCINGûTERMSûTOûWHATûWASû

INITIALLYûPROPOSED

A number of deals in

SYNDICATIONûINCLUDINGûCHEMICALû

group POLYNT-REICHHOLD and

private school chain INSPIRED

EDUCATION have priced wider.

Interest margins increased up to

50bp, while OIDs widened to up

to two points.

A number of investors insist

THEûMARKETûHASûWIDENEDûBYû

BPûANDûWONTûDOû"ûDEALSû

which are priced below 400bp.

MORE WIDESPREAD

The coronavirus has hit market

sentiment and while loans with

obvious exposure to Asia have

softened, the effects are far

more widespread as investors

FEARûANYûBORROWERûWITHûSUPPLYû

chain issues could be impacted

BYûTHEûEPIDEMIC

!ûQUARTERûOFû%-%!SûLEVERAGEDû

lNANCEûPORTFOLIOûISûEXPOSEDûTOû

the coronavirus spreading in

Europe, Fitch said in a report.

7ITHûTHEûMARKETûSOFTENINGû

sponsors are reluctant to put

portfolio companies up for sale,

WHICHûISûLIKELYûTOûRESULTûINûAû

thinner pipeline until at least

the third quarter.

h4HEREûAREûPLENTYûOFûMATUREû

transactions I would like to sell

in a high asset priced

environment, but would we

have discussions around these

CREDITSûINûANû@UNCERTAINTYû

DISCOUNTûENVIRONMENTû.Oû.OTû

at least for the next three to six

months. So there is not a huge

pipeline of deals and we are

TRYINGûTOûBIDEûOURûTIMEvûTHEû

sponsor said. „

EMERGENCYûMOVEûAIMEDûATû

SHIELDINGûTHEûCOUNTRYSûECONOMYû

from the impact of the coronavirus.

7ITHûINTERESTûRATESûFALLINGû

DUFF & PHELPS, SUNDYNE and KISSNER

GROUP all embedded 1% Libor

mOORSûINTOûTHEIRûDEALSûANDû

rushed through other lender-

FRIENDLYûCHANGESûTOûGETûTHEIRû

TRANSACTIONSûOVERûTHEûlNISHûLINE

h.OWûISûTHEûTIMEûTOûPUSHû

HARDERûFORû,IBORûmOORSûINVESTORSû

have the leverage to do so given

THEREûISûMOREûVOLATILITYûINûTHEû

markets,” an investor who

looked at both deals said.

)NDUSTRIALSûlRMû3UNDYNEû

hiked the margin on a US$535m

TERMûLOANûBYûBPûTOûBPûOVERû

Libor and removed two 25bp

step-downs from the deal to

garner enough investor support.

4HEûCOMPANYûISûRAISINGûTHEû

MONEYûTOûFUNDûITSûBUYOUTûBYû

PRIVATEûEQUITYûlRMû7ARBURGû

Pincus.

Salt supplier Kissner, which

RAISEDûAû53MûLOANûALSOû

removed two 25bp step-downs

but left its margin at 450bp over

,IBORû4HEûCOMPANYûISûRAISINGû

THEûDEBTûTOûPARTIALLYûFUNDûAû

BUYOUTûBYû3TONEû#ANYONû

)NDUSTRYû(OLDINGS

#ORPORATEûlNANCIALûADVISERû

$UFFûû0HELPSûINCREASEDûTHEû

MARGINûONûITSû53BNûlRST

LIENû4ERMû,OANû"ûTOûBPûOVERû

Libor from 350bp. Proceeds

BACKûITSûACQUISITIONûBYûAûGLOBALû

investor consortium.

BUYING THE DIP

7ITHûFEWûNEWûOPPORTUNITIESûINû

THEûPRIMARYûSYNDICATEDûLOANû

market, investors sense a

chance to snap up loans in the

SECONDARYûMARKETûWHICHûHASû

sunk as fears of the virus grow.

!VERAGEûLOANûBIDSûFELLûBPûTOû

ûCENTSûONûTHEûDOLLARûINû

SECONDARYûTRADINGûONû4UESDAYû

DOWNûNEARLYûTWOûPOINTSûFROMûAû

month earlier, and dropped to

ûONû&RIDAYûACCORDINGûTOû

2ElNITIVû,0#ûDATA

BERRY GLOBALSûROUGHLYû

US$4.25bn outstanding loan, for

example, fell to an average bid

OFûnûCENTSûONû&RIDAYû

after trading above par earlier

THISûYEAR „

MIXED FLAVOUR

The loans for the Thai bidders

MARKûTHEûlRSTû-!û

lNANCINGSûFROMûTHEûCOUNTRYSû

retail sector involving both

foreign and local banks in

FOURûYEARS

In March 2016, Berli Jucker

signed a US$6.2bn-equivalent

lNANCINGûWITHûMOREûTHANûAû

dozen foreign and domestic

banks for its purchase of a

ûSTAKEûINû4HAIû

HYPERMARKETûOPERATORû"IGû#û

3UPERCENTERûFROMû&RANCESû

Casino Group.

Berli Jucker managed to

trump Central Group,

which owned a 25% stake in

"IGû#ûANDûINITIALLYûDIDûNOTû

want to cash out. However,

Central sold the stake to

Berli Jucker through a

tender offer and in turn

ACQUIREDû#ASINOSû"IGû#û

business in Vietnam.

!Tû53BNnBNûTHEû

4ESCOû-!ûLOANûWOULDûALMOSTû

MATCHûTHEû53BNûTOTALûOFû

ALLûSYNDICATEDûLOANSûCOMPLETEDû

in Thailand in the past four

YEARSûANDûECLIPSEûTHEûANNUALû

RECORDûOFû53BNûSETûINû

ûACCORDINGûTOû2ElNITIVû

LPC data.

4HAILANDSûRETAILûSECTORûISûNOû

stranger to jumbo loans, or

expensive acquisitions. In June

2013, seven Thai and foreign

banks clubbed a US$6bn 12-

month bridge loan for the

acquisition of wholesaler Siam

-AKROûBYû$HANINSûmAGSHIPû

convenience store operator CP

All, valued at around 46 times

2013 earnings.

4HISûYEARûVOLUMESûWILLû

EARNûAûBOOSTûFROMûAû53BN

equivalent loan backing

PAN

!SIANûLIFEûINSURERû&7$û

'ROUPû&INANCIALû3ERVICESû

acquisition of the life

insurance unit of Siam

Commercial Bank.

StanChart is the original

mandated lead arranger and

BOOKRUNNERûOFûTHEûTHREE

YEARû

FACILITYûWHICHûWASûLAUNCHEDû

INTOûLIMITEDûSYNDICATIONûINû

November and has attracted a

handful of banks in the senior

phase. „

4 IFR Top news 2323 .p 4 - 14 .indd 11 06 / 03 / 2020 19 : 26 : 35