Financing In Place for InBev’s CEE SAle

LONDON (Reuters) – The financing package backing CVC’s bid for Anheuser-Busch InBev’s (ABI.BR) central and eastern European (CEE) assets is complete but hangs in the balance as ABInBev weighs its options, banking sources said on Tuesday.

Ten to 12 banks provided an all-senior financing with no junior debt to back CVC Capital Partners’ bid at the end of July, a leveraged banker said.

CVC’s bid failed to meet ABInBev’s price expectations, several bankers said, and the company is considering options which include splitting up the central and eastern European assets. “The financing package is all wrapped and has been for some time. We are expecting a decision imminently, either this week or early next week,” the leveraged banker said.

CVC could not immediately be reached for comment.

Offers were expected to come in at around 1.4 billion euros ($2 billion), while ABInBev was seeking around 2 billion euros, according to one person familiar with the situation, Reuters reported last month.

Bankers said the financing package which consisted of around 700 million euros of debt and 700 million euros of equity could be boosted by a vendor loan from ABInBev to ease the sale.

Vendor loans from sellers to buyers defer some of the payment and are typically used in times of market dislocation to resolve disputes over business valuations.

Banks providing the loan include specialist regional lenders including ING, HSBC, JP Morgan, Bank of Ireland, Calyon and UniCredit, banking sources said.

The loan is expected to have low leverage of around three times to compensate for the complex nature of the asset, which consists of 11 breweries in seven countries and requires lenders to take currency risk.

“Most banks doing business in the region are used to taking currency risk. You can’t really hedge your way out, which is why leverage is three times and not six times as it would be for such a cash-generative business,” the leveraged banker said.

The loan’s pricing is around 500 to 600 basis points, a banker said, and is expected to be held by the club of banks with no further sell-down if CVC’s bid is successful, several sources said.

(Reporting by Tessa Walsh; Editing by David Holmes)