June 6, 2019 / 2:59 PM / 3 months ago

Banks line up €1bn debt as CRH unit sale heats up

LONDON, June 6 (LPC) - Bankers are working on debt financings in excess of €1bn to back a potential sale of Irish building materials group CRH’s European distribution arm as bidders prepare second round bids, banking sources said.

Dublin-based CRH hired Bank of America Merrill Lynch earlier this year to run a sales process of the unit, which has an estimated value of €2bn, the sources said.

Second round bids in an auction process are due by July 12 after first round bids were submitted on May 20, the sources said.

A number of sponsors have been linked to the division including Advent, Apollo, Bain, Blackstone, CVC, CD&R, EQT and Lonestar. Bankers are being informed who is through to the next round.

CRH was not immediately available to comment. The private equity firms either declined to comment or were not immediately available to comment.

BAML has provided a staple financing of around 6.25 times to be offered to any bidder, banking sources said.

This would equate to around €1.125bn, based on the unit’s approximate €180m Ebitda. Undrawn facilities would take the total debt level higher to around €1.3bn.

Other bankers are also working on financing packages of a similar value, comprising senior leveraged loans and subordinated second-lien loans. High-yield bonds could also be considered.

Bankers are using CVC’s Swedish construction products and tools supplier Ahlsell and Lonestar’s Nordic-based building materials retailer and distributor Stark Group as comparisons, the sources said.

CRH employs 90,000 people at 3,700 locations worldwide and had revenues of €26.8bn in 2018. (Editing by Christopher Mangham)

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