NEW YORK (Reuters) – Private equity firm CVC Capital Partners [CVC.UL] asked lenders to global chemicals distributor Univar to approve a new $300 million loan and extend existing debt as it readies a 49 percent stake sale, sources told Thomson Reuters LPC.
The stake is expected to be sold to another private equity firm, one of Univar’s institutional investors said, although an Initial Public Offering (IPO) also remains an option.
CVC is expected to use the new $300 million loan to pay itself a dividend, the investor said. A spokeswoman for CVC declined to comment.
Lenders are being asked to extend the maturity of an existing $2.35 billion loan which backed CVC’s purchase in 2007 in return for higher pricing and a Libor floor to guarantee a stable return.
The existing loan will be extended by two years to 2016, pricing will be increased by 100 basis points (b.p.) to 400 basis points over Libor and a 1.5 percent Libor floor will be added.
Lenders agreeing to extend the existing loan will receive an additional 12.5 basis points fee and will earn another 12.5 basis points fee for approving the new loan.
The new $300 million loan will pay a higher rate of 450 b.p. over Libor with a Libor floor of 1.5 percent and will rank pari-passu alongside the existing loan.
Existing lenders are however being asked to approve the amendment without knowing the identity of the buyer and are not able to join the new loan which carries higher pricing and could be provided by the new buyer.
IPO STILL AN OPTION
Lenders are being asked to approve the amendment as a prelude to the sale of a minority stake but Univar also filed for an Initial Public Offering in June which remains an option, sources said.
Univar Inc filed with U.S. regulators to raise up to $862.5 million in an IPO of common stock.
In a preliminary prospectus filed with the U.S. Securities and Exchange Commission, the company said that Goldman Sachs & Co, Bank of America Merrill Lynch, Barclays Capital, Deutsche Bank, J.P. Morgan and Morgan Stanley were underwriting the IPO.
The Seattle, Washington headquartered global distributor of commodity and specialty chemicals said that it intended to use proceeds from the IPO to repay debt and for general corporate purposes.
The filing did not reveal how many shares the company planned to sell or their expected price.
(Reporting by Leela Parker; Editing by Bernard Orr)