February 8, 2017 / 3:19 PM / 5 months ago

LPC-Bankers prepare €1bn financing for potential Archroma sale

2 Min Read

LONDON, Feb 8 (Reuters) - Bankers are working on debt financings of around €1bn to back a potential sale of Swiss chemicals company Archroma, banking sources said on Wednesday.

Buyout group SK Capital put Archroma up for sale earlier this year, hiring Evercore and HSBC to find a buyer for the company, which could fetch around SFr1.5bn (US$1.51bn).

The company is due to attract both corporate and sponsors buyers and first round bids were due last week, one of the sources said.

HSBC has offered a staple financing to back a potential sale, equating to around 5.75 times Archroma’s approximate €180m Ebitda. The debt is expected to be offered in the form of leveraged loans, denominated in euros and dollars.

Other banks are also pitching financings to potential buyers, aiming to beat the staple financing and win a place on the deal.

SK Capital was not immediately available to comment.

Bankers are eager to fund the buyout, attracted to committing a large underwritten, event driven financing as an alternative to the flood of lower paid and less lucrative repricings and refinancings so far this year.

“It is a chemicals business, so it is in a sector that can be quite cyclical and capital intensive. Having said that, it seems like it will be a nice-sized transatlantic deal for a good company and one a lot of banks will be looking at,” one of the sources said.

Archroma was formed when SK Capital acquired Swiss Clariant’s textile, paper and emulsions business in September 2013.

It last tapped the loan market in November 2016, when it raised a US$200m-equivalent add-on loan to fund a dividend payment, while at the same time repricing its existing loans on more attractive terms and extending maturities.

Prior to that it accessed the loan market in July 2015 when it agreed loans totalling US$515m-equivalent, to refinance debt and support the acquisition of BASF’s textile chemical business.

$1 = 0.9943 Swiss francs Editing by Christopher Mangham

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