Russian LBOs gather pace

Russia is defying the general market slowdown, with the country’s first LBO loan in syndication and two further deals set to follow.

TPG is understood to be close to a US$800m deal to buy News International’s Russian headquartered billboards group News Outdoors. The business has operations in 13 countries, mainly in Central and Eastern Europe and in Asia. The deal is understood to be backed by debt provided by a US investment bank and Austrian lenders.

TPG is also poised to take a majority stake in the Seventh Continent supermarket chain. That deal may have moved closer last week. The Russian press reported that part owner Alexander Zanadvorov had increased his stake in the business by building a more than 50% stake in 7K Invest Holding, which holds 74.81% of Seventh Continent and 50% of its real estate arm Mkapital. Zanadvorov’s stake building was backed by close to US$1bn in debt facilities.

Meanwhile, bookrunners Goldman Sachs and UniCredit (CA-BA) and MLA VTB have placed the mezzanine and PIK elements of the financing for Lion Capital’s buyout of Russian juice maker Nidan Soki. Both junior pieces were placed at par.

The leads continue syndication of the senior facilities. They say the sell-down process will take longer than usual because the deal is the first Russian traditional LBO ever syndicated.

Senior debt of US$290m is made up of a US$100m six-year A loan priced at 325bp, a US$100m seven-year B loan at 375bp and a US$30m revolver together with a US$60m capex facility, both paying 325bp. Banks are invited on tickets of US$25m for 90bp and US$12.5m for 75bp.

The leads are likely to speak to as wide a pool of Russian bank investors, and the Russian desks of international banks, as possible, not only to win commitments but to gauge the reaction and educate the potential market for the coming wave of LBO debt syndications.