Deutsche Bank last week launched the U.S. syndication of the approximately $3 billion bank debt refinancing for engineering group Invensys. About 15-20 institutions were present at the meeting in New York, a loan investor said. "We think the structure is reasonable. We like the company," another buysider noted. "We think that the company's got reasonably decent prospects and the pricing is adequate."
The bank debt, being syndicated in Europe and the U.S., comprises a $455 million revolver, $730 million bonding facility and $640 million "A" loan. A £450 "B" loan will be syndicated in three currencies, including an approximately $472 million loan, E149 million "B" piece and £100 million "B" tranche. There is also a second-lien component split into a $189 million tranche and a E74 million tranche. The maturity is set at five years. The exact sizes of the "B" and second-lien pieces will not be finalized until after the bank sees demand, a Deutsche Bank loan official said. Price talk is LIBOR plus 21/2% on the pro rata, LIBOR plus 3% on the "B" loan and LIBOR plus 41/4% on the second lien.
Before the meeting, European investors said they were wary of the credit because the traditional amount of due diligence had not yet been provided to potential bank loan investors (LMW, 2/16). "We've had a lot of calls from investors asking diligence questions and I don't think we've sent anyone away unhappy yet," the banker responded. "This is a major corporation, their equity base is £1.3 billion and their subordinated debt for new bonds and existing bonds is about £890 million, so there's a hell of a lot of subordinated capital standing behind the senior lenders," he added. An Invensys spokesman said the company "is very confident that everything is going smoothly."
Proceeds from the loan, along with around £470 million of equity and £650 million of high yield bonds, will be used to repay about £1.5 billion of indebtedness and to establish an escrow account of around £576 million to fund certain identifiable legacy liabilities.