Moscow mule

The US$315m in senior secured credit facilities backing the buyout of Russian Alcohol by a consortium that includes Lion Capital, Goldman Sachs European Special Situations Group (GSESSG) and Central European Distribution Company (CEDC – a leading Polish vodka distributor), has launched.

The facility is mandated to Goldman Sachs, ING, RZB and UniCredit as joint mandated lead arrangers and bookrunners.

The total net cash-pay leverage at closing is 2.49x with common equity and equity-like structures accounting for 78.2% of the capital structure. This is an unusually high equity component in a buyout, but many mid-sized companies in Russia and the CIS are considered to be high-growth prospects as incomes are still rising and consumption follows suit.

That said, leveraged buyouts are few and far between in Russia and the CIS. Raising debt for the most recent example, the LBO of juice company Nidan Soki by Lion Capital, is not believed to have fared particularly well.

Mandated lead arrangers on the Nidan Soki debt, Goldman Sachs, UniCredit (CA-BA) and VTB, increased the margins on the senior tranche of the US$290m debt package in February this year, though this was believed to have been to little avail.

Russian Alcohol is said to benefit from being a growth company in a segment that is considered highly resilient. Its Green Mark vodka is the number three seller globally by volume behind Smirnoff and Absolut.

The LBO bid for Expro, believed to be mandated to RBS, Lloyds TSB, Royal Bank of Canada, HSBC and DnB NOR Bank by Umbrellastream, a consortium led by Candover, with Goldman Sachs and Alpinvest, is set to launch this week.

The bid for Expro has grown over time with the same banks backing a £1.605bn bid in April that was raised to £1.73bn earlier this month and is now £1.806bn. The bid for Expro had been unsuccessfully contested in the UK courts by US oilfield services company Halliburton, which argued that the lower bid had been accepted.

Elsewhere Dresdner Kleinwort, Fortis, Merrill Lynch and Rabobank have launched syndication of the debt supporting CVC‘s €800m buyout of Taminco, the world’s largest producer of alkylamines and derivatives.

Moreover, the US$2.975bn debt package supporting the buyout by Nordic Capital and Avista Capital Partners of Convatec from Bristol-Myers Squibb is set to close oversubscribed this week.

Bookrunners and mandated lead arrangers here are JPMorgan (global co-ordinator), Bank of Ireland, Dresdner Kleinwort, UniCredit and GE, with MLAs HSH Nordbank, Mizuho Corporate Bank, Nordea, SEB Merchant Banking and Swedbank.

Senior debt is split between a US$750m seven-year term loan paying 300bp over Libor, a US$425m eight-year term loan B at 350bp, a US$675m term loan C at 425bp, a US$125m revolver at 300bp and a US$100m capex piece also paying 300bp.

In addition there is a US$900m mezzanine piece. Leverage is 4x senior debt rising to 5.99x total debt. In syndication lenders were invited to join on tickets of either US$30m earning 140bp or US$15m for 100bp.

The deal is said to have benefited from both Nordic Capital’s bank relationships and the strong European following the healthcare sector enjoys.