The presence of the high yield bond means that the loan will be sold through the banks’ leveraged finance desks. When Macquarie raised €1.15bn of loans to finance its buyout of Techem in 2008, most banks syndicated the deal from their infrastructure desk.
With six bookrunners on the refinancing, only around €150m is likely to be sold down, according to bankers close to the deal.
A bond roadshow began on Thursday, led by JP Morgan (billing and delivering), Deutsche Bank and Crédit Agricole as global co-ordinators. Commerzbank, Royal Bank of Scotland and UniCredit are joint bookrunners, and together the six banks are arranging the loan.
Techem’s loans comprise a five year €450m bullet term loan paying 425bp, a €50m revolver and a €50m capex facility.
The bonds comprise a €410m senior secured seven year tranche, being whispered at 6.5%-7%, and a €325m senior subordinated eight year note with price whispers in the 8% to 9% range (see Corporate Bonds section for more details).
"It is a strong credit compared to most leveraged loan deals, and there are some big accounts already in the loan who I expect will want to stay involved," said a loans banker at one of the bookrunners. "It is an infrastructure type of name, with utility-like cash flows."
Commerzbank, Crédit Agricole, JP Morgan and Royal Bank of Scotland were bookrunners on the original buyout loans. The original revolver, capex facility and senior term loan — totalling €150m — are due to mature in January 2015, while the €150m junior term loan expires in January 2016.
Moody’s sees Techem’s adjusted leverage ratio at 7.3 in the full year 2011/2012. Normalised for €81m of interest rate swap losses, leverage was 5.3 times. Techem had group revenues of €692.9m in the full year, of which around 80% was from Germany.
