LONDON, Oct 5 (Reuters) - Bankers are looking to raise around 900m-equivalent of loans to back a merger between UK petrol station forecourts operator Euro Garages and its European counterpart European Forecourt Retail (EFR) Group, banking sources said on Wednesday.
The merger, announced on October 5, will combine TDR Capital-owned EFR with Euro Garages, which TDR Capital also has a stake in.
Bank of America Merrill Lynch and Credit Suisse are leading the financing, alongside Barclays, HSBC, ING, Lloyds and Rabobank. The company will seek to raise around 900m of new leveraged loans, denominated mostly in euros and including some sterling, the bankers said.
A bank meeting is due to take place in the coming days to launch syndication of the loan to institutional investors, the bankers said.
The financing is expected to be well received in Europe’s liquid leveraged loan market, which has been crying out for new issue amid a lack of new deals, the bankers said.
TDR bought the Benelux and French divisions of Israeli conglomerate Delek Group in 2014, renaming it EFR, backed with a 655m loan and acquired a £1.3bn minority stake in Euro Garages in 2016, backed with £745m of leveraged loans.
As part of the merger, EFR loans are expected to be repaid, while Euro Garages’ loans are expected to remain in place, with lender consent needed for the new deal, bankers said.
TDR Capital, Euro Garages and EFR were not immediately available to comment.
In January, Euro Garages raised a £370m seven-year term loan B paying 550bp over Libor and a £250m-equivalent euro-denominated term loan B paying 500bp over Euribor. Both tranches had a 0% floor and an OID of 99, according to Thomson Reuters LPC data.
Euro Garages and EFR together will have around 1,450 locations and 8,500 employees, serving more than 6 million customers a week through the management and operation of retail brands such as BP, ESSO, Shell, Texaco, Carrefour, Greggs, Louis Delhaize, Starbucks and Subway. The group has total pro forma gross annual revenues of around 6bn, according to the announcement. (Editing by Christopher Mangham)