February 2, 2015 / 10:52 AM / 3 years ago

TRLPC-CRH backs Lafarge Holcim asset buy with 6.5 bln euro bridge loan

LONDON, Feb 2 (Reuters) - Banks have lined up a 6.5 billion euro ($7.37 billion) bridge loan to back Irish building supplies group CRH’s 6.5 billion euro acquisition of assets that rivals Lafarge and Holcim needed to sell ahead of their planned merger, CRH announced.

Bank of America Merrill Lynch, JP Morgan and UBS are bookrunners and mandated lead arrangers on the senior unsecured bridge loan facility which comprises a 2 billion euro tranche A maturing December 31 2015; a 3.5 billion euro tranche B maturing June 30 2016; and a 1 billion euro tranche C maturing June 30 2018.

CRH can extend the maturity dates of tranche A and tranche B twice, each time by six months. The loan will be taken out by proceeds from assets sales and from new bonds.

In June 2014, CRH raised a 2.5 billion euro, five-year revolving credit facility.

CRH will also use 2 billion euros of cash on balance sheet to fund the acquisition, as well as an equity raising of around 1.5 billion euros.

CRH said it was buying assets mainly in Europe, Canada, Brazil and the Philippines. CRH will not keep sole control of all the assets it agreed to buy and is in talks with private equity firm KKR to partner on investing in the UK assets.

Bankers lined up just over 1 billion pounds ($1.50 billion) of debt financing to back private equity firm KKR’s investment in the UK assets, equating to around 5.5 times the UK asset’s EBITDA of approximately 170 million pounds.

CRH, with annual revenues of 18 billion euros in 2014, beat a consortium led by Blackstone. CRH was in a stronger position than the buyout firms because it could integrate the assets into its own business, and so offer a higher price, a source said.

In a conference call with reporters, the chief executives of the merging firms said the CRH deal price included the assumption by the Irish firm of about 1.3 billion euros of debt. CRH, which had a net debt of around 2.5 billion euros or 1.5 times earnings at the end of 2014, is also embarking on a disposal plan of its own.

Lafarge and Holcim announced merger plans last year, hoping to cut costs and tackle overcapacity and weak demand. Their new company will be the world’s biggest cement maker with $44 billion in annual sales.

Holcim and Lafarge initially received more than 60 tentative bids from industry and private equity firms for some or all of the assets. ($1 = 0.8814 euros) ($1 = 0.6656 pounds) (Editing by Christopher Mangham)

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