Reuters: Private Equity: Bankers put final touches to Iglo buyout financing -sources

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Bankers put final touches to Iglo buyout financing -sources Jun 21st 2012, 10:51 By Natalie Harrison Thu Jun 21, 2012 6:51am EDT LONDON, June 21 (IFR) - Leveraged finance bankers are putting the final touches to the debt package to back the leveraged buyout of Birdseye fishfinger maker Iglo after the two frontrunners BC Partners and Blackstone teamed up earlier this week, banking sources said on Thursday. Around five banks are expected to be involved in the financing, which include the two M&A advisors to Blackstone - Goldman Sachs and Nomura - and the two M&A advisors to BC Partners - JP Morgan and UBS - as well as sell-side advisor Credit Suisse, banking sources said. The banks were either not immediately available to comment, or declined to comment. "We were told to put our pens down yesterday," said one leveraged finance banker no longer in the running. Market consensus is that the debt will consist of a senior loan, and a private subordinated instrument. That would be similar to the buyout financing of BSN Medical by EQT earlier this month, which opted for a club mezzanine deal for the subordinated portion of the capital structure rather than high-yield bonds. The size of the subordinated debt, estimated in the region of EUR600m, has raised eyebrows. One banker said it would be the highest private financing in years, and would easily surpass the EUR392m mezzanine loan provided by five funds for BSN. Among the names mooted in the market that could provide the private funding are Apollo, Park Square, Sankaty, GSO and Goldman Sachs mezzanine. "There are lots of theories about why the two have teamed up, especially as there were no other serious contenders left in the bidding process," said one high-yield banker. "BC Partners is perceived as having the financial firepower, while Blackstone already owns the Birds Eye brand in the United States through its Pinnacle frozen food business." The sale of Iglo by Permira would be the biggest buyout of the year and has garnered a lot of interest, leading to over 10 banks circling the final bidders to help with the financing. The joint bid will be put forward today. There is no guarantee that Permira will agree to a sale if the bidders do not meet its price expectations. Permira has put a price tag of around EUR2.8bn on the business that it bought from Unilever in 2006 for EUR1.73bn. "There is no guarantee that a combined offer will be accepted if the two parties are trying to put in a low-ball offer," said another leveraged finance banker. Another banker said bids were likely to be in the region of EUR2.6-2.8bn, and that Permira would find it tough to negotiate on price with no other bidders any longer involved in the process. Blackstone and BC Partners were the last two in the frame for the maker of Birdseye Fish Fingers after PAI Partners withdrew from the auction process last month. One high-yield banker said the broad shape of financing would likely not be "a million miles away" from the staple put together by sell-side advisor Credit Suisse. The leverage on that staple is around EUR2.4bn, or around 6 to 6.25 times the company's EUR325.8m EBITDA, banking sources said. Credit Suisse has met with both high-yield and mezzanine investors in the past couple of weeks, but banking sources that have spoken to accounts that met with the bank said there was little discussion about the capital structure of Iglo. "My impression is that the discussions were mostly focused on the Iglo business," one of those sources said. Link this Share this Digg this Email Reprints

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