Financing in brief

• Sponsors Montagu and Global Infrastructure Partners (GIP) have mandated Barclays, Credit Suisse, HBOS, HSBC and RBS to underwrite a recommended £1.7bn public to private bid for waste services group Biffa. Under the terms of the deal, bid consortium WasteAcquisitionco will pay 350p in cash per share for Biffa, valuing the equity at £1.231bn and implying an enterprise value of £1.7bn to £1.9bn. The underwriters will provide debt facilities of more than £1bn to back the deal. Sponsors Montague and GIP will contribute £306m in equity each for their respective 43% stakes in the business and junior partner UCIL will pay £100m for the remaining 14%. Despite the deal being recommended, Biffa’s closing share price of 369.5p per share on Friday, after the deal was announced, suggests that higher bids by trade or infrastructure funds could see the offer bested. Facilities will be structured as an LBO, with the deal likely to benefit in syndication from Biffa’s sector and quasi-infrastructure profile. The business is well banked and well priced senior debt is likely to have strong appeal to UK commercial bank investors in particular. Junior tranches may be more difficult to place. In the current market, the large size and sterling denomination of the deal could prove challenging. Biffa was spun out of Severn Trent in 2006. Montague’s original partner HG Capital withdrew from the bid.

• Bookrunners reported a large turnout on February 7 in Frankfurt at the bank meeting and management presentation for Media & Broadcast. Banks are offered tickets of €15m paying a 90bp fee and €25m paying 125bp. OIDs will be negotiated separately with funds. Physical bookrunners are BNP Paribas and Goldman Sachs with ABN AMRO, Calyon, Dexia and SG as bookrunners and MLAs. The €565m all-senior syndication took place on February 2. Facilities are made up of a €100m seven-year term loan A paying 237.5bp over Euribor, a €162.5m eight-year term loan B paying 287.5bp, a €162.5m nine-year term loan C paying 37.5bp and an €80m revolver paying 237.5bp. Banks are offered participation fees while an OID is likely to be negotiated with funds.

• Bookrunners CIBC, Morgan Stanley and Nordea will hold a bank meeting on February 13 for the €700m of facilities backing Finnish metal business Luvata‘s acquisition of ECO Group. Facilities are split between a €50m revolver paying 200bp, €80m capex facilities paying 200bp, a €115m A loan paying 200bp, a €152.5m B loan paying 275bp with two-year call protection and a €152m C loan paying 325bp with two-year call protection. An additional €45m of second-lien pays 400bp with three-year call protection. A €105m mezzanine tranche has been placed, it pays 8.50% with three-year call protection.

• MLA and bookrunner Natixis and MLA Rabobank have closed a recapitalisation for Nutrition & Sante. The deal cuts the cost of debt for the business, notably through the reimbursement of mezzanine bonds. The deal was financed by cash extraction and an additional €20m senior term loan. The term loan was strongly oversubscribed in syndication. The loan is a single tranche 7-1/2-year bullet, paying a margin of 300bp. The waiver fee was 15bp and the participation fee was75bp. Banks transferred into the facility on January 16. This new line is in addition to €157.5m of debt facilities arranged by Natixis and Rabobank in 2006. Nutrition & Sante was sold by Novartis to ABN AMRO Capital and L Capital Management. At the time, senior debt comprised a €45m seven-year tranche A paying 225bp over Euribor, a €20.75m eight-year bullet tranche B at 275bp, a €20.75m nine-year bullet C loan at 325bp, a €15m seven-year tax facility paying 150bp and a €15m seven-year capex/acquisition facility at 225bp and a €15m seven-year revolver at 200bp. The €31m of ten-year mezzanine had been pre-placed. Senior leverage was 4.3x EBITDA and total leverage amounted to 5.6x EBITDA.

• Bookrunners have launched syndication of the €565m all senior debt package backing Telediffusion de France‘s buyout of Deutsche Telekom‘s Media & Broadcast unit. BNP Paribas and Goldman Sachs are physical bookrunners with ABN AMRO, Calyon, Dexia and SG as bookrunners and MLAs. Facilities are made up of a €100m seven-year term loan A paying 237.5bp over euribor, a €162.5m eight-year term loan B paying 287.5bp, a €162.5m nine-year term loan C paying 37.5bp and an €80m revolver paying 237.5bp. Banks are offered participation fees while an OID is likely to be negotiated with funds. A bank meeting will be held in Frankfurt on February 7. The deal is the second element of the financing backing the deal. In December bookrunners BNP Paribas, Citi, HSBC, Merrill Lynch and Morgan Stanley placed a €170m add-on at TdF level, also supporting the deal. The add-on deal was placed with an OID at 98. Facilities are split between a €53.1m six-year term loan A paying 275bp over Euribor, a €47.1m seven-year term loan B at 300bp, a €47.1m eight-year term loan C paying 350bp and €22.7m of eight-and-a-half-year second-lien loan paying 575bp.

• Goldman Sachs, UniCredit (CA-BA) and VTB have increased the margins on the senior tranche of the US$290m debt package supporting Lion Capital’s buyout of fruit juice maker Nidan Soki. The Russian deal is the first Western-style LBO in Russia and was initially launched last year. A mezzanine tranche has also been added. At the larger end of the primary leveraged loan market it was another week characterised by what has not happened rather than what has. Classic leveraged buyouts, particularly large scale deals are scarce.

• A potential buyout of Spanish logistics business Logista looks to be off the cards with new owner Imperial Tobacco now set to increase its stake in the business rather than sell out, having failed to attract a high enough offer. The deal had been tipped as one of the few large-scale buyouts feasible in the current market. Some investors avoid tobacco deals and the sector may well be in long term decline. Logista, however, has something approaching a monopoly on the distribution of tobacco products in Spain and Italy. It is highly cash generative with predictable cash flow, making it an ideal target for higher gearing.The failure to sell means Imperial Tobacco’s Altadis unit will now buy the 40% stake it does not already own in Logista for approximately €910m. That in turn means Imperial Tobacco must now launch a £5bn rights issue, rather than the £3bn–£3.5bn many had hoped for. (See Equities)

• The Slovenian government is understood to have been underwhelmed by bids for a stake in its €3bn incumbent Telekom Slovenije, with no deal a possible result. Iceland-based Skipti and a consortium of Bain Capital, Axos Capital and Slovenia’s BT Global Services are the remaining bidders in an auction for the business, with the Bain consortium backed by a classic LBO structure. Bidding is for 35% of the company from the government’s 74% holding, to be followed by a public offer for the remaining 26% free float.

Apax Partners and local partner Meir Shamir have completed the US$1bn acquisition of food processor Tnuva. Tnuva’s operations include a 70% share in the Israeli dairy market. Tnuva was controlled by more than 600 agriculture producing collectives (kibbutzim and moshavim), as well as the stat+e and several banks. The terms of the deal means more than 20% of Tnuva will be retained by entities controlled by the agricultural collectives.

• In France the Gores Group, a US private equity firm, has closed a €383m acquisition of Sagem Communications from SAFRAN. Sagem Communications specialises in broadband communications and convergence technologies. Under the terms of the deal Gores Group will be majority shareholders, with around 80% of shares, with a minority share of the capital held by management and a group of employees as well as by SAFRAN, CIC Finance and Club Sagem.