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Sole bookrunner Morgan Stanley gets deal multiple times covered
Trade was oversubscribed in under 20 minutes
In highly concentrated book, top 20 investors take 90%
The relaunched IPO was cancelled after leads attempted to reduce the transaction to around €300m
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ThyssenKrupp Elevator (TKE) is a deal of superlatives: the largest European high yield debut, the largest European LBO in over a decade, the last LBO before coronavirus, the most levered debut industrial, and the worst-ever covenant package — or at least, it was at first. Three days after launching the bond leg of the deal, the sponsors and leads capitulated, erasing almost every controversial term in the docs — perhaps the largest ever retreat and the biggest investor victory in the long-running war over bond covenants. But it’s too soon for investors to celebrate, as the episode only highlights how damaging this conflict has become. -
Banks sitting on €8bn of underwritten debt to finance Advent and Cinven’s buyout of ThyssenKrupp Elevator finally hit the ‘go’ button early this week, unveiling the takeout for the largest European LBO financing in more than a decade. Pre-marketing and pre-placement have helped derisk the exit, but documentation is as weak as on any deal in the pre-Covid market, making the financing a crucial test for the strength of any post-crisis investor resistance, writes Owen Sanderson.
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The Basel Committee has proposed tweaks to its securitization rules to ease non-performing loan sales — but it hasn’t gone as far as market participants would like, and has rowed back from proposals tabled by the European Banking Authority last October, which would have cut capital requirements much further.
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The second slice of the ThyssenKrupp Elevator financing hit the market on Wednesday, with €4bn of bonds announced across secured and unsecured tranches in dollars and euros, joining the €3bn of loans earlier this week as part of the package to fund Europe’s largest LBO in a decade.
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In the wake of the coronavirus pandemic, the speciality lending landscape in Europe could see a shakeout, as financing becomes scarcer and leverage terms tougher, forcing thinly capitalised loan originators to seek extra funds or put themselves up for sale, according to a report from securitization specialists Integer Advisors.
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Banks sitting on the €8bn of bridge loans to finance Advent and Cinven’s takeover of ThyssenKrupp Elevator (TKE) have finally launched the first part of the deal into public syndication, with the announcement on Monday of a €3.05bn euro and dollar term loan 'B'.
