The three banks leading the US$13.5 billion-equivalent loan and bond financing backing U.S. private equity firm Blackstone Group’s acquisition of a majority stake in Thomson Reuters’ Financial and Risk (F&R) unit are set to sign more banks into the deal.
Around 21 senior banks are expected to join the deal, which is being led by JP Morgan, Bank of America Merrill Lynch and Citigroup, and is the biggest buyout financing since the financial crisis. The lead banks invited 23 banks to join at the next level and underwrite 28 percent of the deal for fees ranging from around 3 percent to less than 1 percent, several sources said.
Blackstone is buying a 55 percent stake in Thomson Reuters’ F&R unit. Senior participation in the financing was linked to the amount of business that the banks do with Thomson Reuters.
Banks making the biggest commitments after the leads are Wells Fargo, Morgan Stanley, Goldman Sachs and UBS, the sources said. There could be six or seven tiers of commitments.
Other banks that are expected to join the deal include Credit Suisse, HSBC, Deutsche Bank, Barclays, Royal Bank of Canada, SMBC, MUFG, Mizuho, Société Générale, Standard Chartered, Natixis, BMO, Toronto-Dominion, Unicredit, Intesa Sanpaolo, ING and Jefferies.
The group is expected to be confirmed and banks signed into the deal in the next few days, sources said.
Blackstone could not immediately be reached for comment. JP Morgan, BAML and Citigroup declined to comment.
Lenders may have to sit on their commitments for some time, due to a lengthy commitment period, the sources said. The deal is not expected to be syndicated more widely to institutional investors until the end of June at the earliest, and could even be launched after the summer, they added.
The deal includes a US$8 billion-equivalent term loan B, which is split between US$5.5 billion and US$2.5 billion-equivalent in euros. The financing also includes US$3 billion-equivalent of secured bonds split between US$2 billion and US$1 billion-equivalent in euros, and US$2.5 billion-equivalent of unsecured bonds split between US$1.8 billion and US$700 million equivalent in euros.
The company will also place a US$750 million revolving credit facility.
Additional funding comes from US$1 billion in preferred equity, with a 14.5 percent payment-in-kind (PIK) coupon, US$3 billion of cash equity that Blackstone is contributing, and US$2.5 billion of existing equity, based on the US$20 billion valuation, that will be rolled over.
Leverage is expected to be around 4.5 times through the secured debt and 5.6 times total debt after Ebitda adjustments, which could be as much as 30 percent as the transaction is a carve-out and involves reallocating costs.
The size of the debt and leverage currently imply Ebitda of about US$2.4 billion, including around US$650 million of cost savings, based on the last 12 months’ Ebitda of approximately US$1.7 billion for the F&R unit.
The currency splits and Ebitda figures may change depending on investor demand the timing of the wider institutional syndication.
Update: Canada’s Thomson family controls 64 percent of Thomson Reuters shares through Woodbridge Co Ltd. The Blackstone deal will see Thomson Reuters retain 45 percent of the F&R business.
By Andrew Berlin
(Writing by Tessa Walsh, additional reporting by Michelle Sierra)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
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