LONDON, Jan 11 (Reuters) - A 1.55bn debt financing for Lone Star’s buyout of Germany-based building materials maker Xella is being shown to earlybird investors, banking sources said on Wednesday.
Lone Star agreed a deal in December to buy Xella from PAI Partners and funds managed by Goldman Sachs’ investment arm for around 2.2bn.
The 1.55bn financing backing the buyout was underwritten as a senior secured loan and bond deal but could revert solely to loans in keeping with Lone Star’s preference, if there is enough appetite from the loan market, the sources said.
Loans are cheaper than their bond counterparts at the moment and are not restricted by call-protection.
Europe’s extremely liquid leveraged loan market was desperate for new paper in the last quarter of 2016, in a bid to put money to work amid very little event-driven supply. It is expected 2017 has kicked off in the same light.
The financing, which totals around 5.0 to 5.5 times Xella’s 271.3m Ebitda, is being shown to a select group of institutional investors this week, to gauge market appetite. It is expected to launch for general syndication next week, the sources said.
If bonds do remain in place, then they will launch towards the end of the loan syndication, the sources said.
Lonestar was not immediately available to comment.
Credit Suisse, Goldman Sachs and Morgan Stanley are joint physical bookrunners on the financing, while BNP Paribas, Jefferies, Credit Agricole CIB, UniCredit, Barclays and Deutsche Bank are joint bookrunners.
Xella says it is the world’s largest manufacturer of aerated concrete blocks, calcium-silicate units and high performance boards.
The group has 96 production plants in 20 countries and employs 5,900 staff globally. (Editing by Christopher Mangham)