Few deals to close before Christmas

Loan syndication, difficult since July, has again become extremely difficult in the European market.

The gap down in secondary prices is both a product and a symptom of a general risk aversion among investors. With more than 30 pre-crunch legacy deals and new era deals in the market, sources now say the remainder of the year looks unlikely to see more than a handful of deals close.

Deals like Almatis, Elis, Firth Rixon, OGF and PHS are understood to be the most favoured, with a plethora of other deals struggling to find support. The collapse of secondary prices means even new era deals such as Firth Rixson are offered at a discount of 99.5.

New launches are few and far between and there are unlikely to be many if any this side of January.

Last week Bank of Scotland launched the €240.5m of senior debt backing Pragma Capital‘s tertiary buyout of French shop fittings firm Group Retif from ABN AMRO Capital.

Facilities are split between a €45m six-and-a-half-year term loan A paying 225bp over Euribor, a €50m seven-and-a-half-year term loan B paying 275bp, a €50m eight-and-a-half-year term loan C paying 325bp, a €30m seven-year capex facility paying 225bp and a €20m seven-year revolver paying 225bp. In addition there is a €45.5m second-lien tranche.

ICG will provide an additional mezzanine loan. Leverage is 4.3 times through the senior debt.

ABN AMRO Capital acquired Group Retif in 2002 in a deal backed by €90.7m in senior facilities and €21.4m of mezzanine via MLA SG and joint arranger Credit Agricole Indosuez.

Despite the difficulties in syndication, banks continue to underwrite new deals, particularly mid-market deals and regional deals.

Bridgepoint has mandated Commerzbank and ING to arrange the debt supporting the acquisition of Polish rail freight distributor CTL Logistics. The deal is Bridgepoint’s first acquisition in Central Europe. CTL had revenues of about €285m in 2006.

Natixis has been mandated to arrange debt for a proposed LBO of Onduline Group. Onduline makes lightweight petroleum-based materials including roofing materials. It is owned by Financiere OFIC.

Montagu Private Equity and HgCapital have confirmed making an approach to the board of Biffa, a circa £1bn UK waste management business. The board of Biffa has rejected this approach. The prospective sponsors have been in talks with HSBC and HBOS regarding a debt.