August 1, 2019 / 2:54 PM / 3 months ago

CORRECTED-LSE nets US$13.5bn bridge to refi Refinitiv LBO debt

(Corrects penultimate para. to say LSEG, not Refinitiv)

By Apple Lam and Tessa Walsh

LONDON, Aug 1 (LPC) - London Stock Exchange Group has arranged an underwritten bridge loan of about US$13.5bn to support its proposed acquisition of Refinitiv, according to a press release on Thursday.

Barclays, Goldman Sachs and Morgan Stanley have underwritten the loan, banking sources said.

Goldman Sachs, Morgan Stanley and Robey Warshaw are lead financial advisers to LSE. Barclays Bank is acting as sponsor, corporate broker and financial adviser to LSE, while RBC Capital Markets is also acting for LSE.

Proceeds from the bridge refinance debt of the same size that backed the leveraged buyout of Refinitiv last year.

Refinitiv, the parent company of LPC, was created last year when a Blackstone Group LP-led consortium bought a 55% stake in Thomson Reuters’ Financial and Risk business in the largest leveraged buyout since the financial crisis. Thomson Reuters owns the remaining 45% stake.

A US$13.5bn loan and bond package financed the Blackstone consortium’s LBO. The loans were split between a US$6.5bn facility and a US$2.75bn-equivalent euro-denominated financing.

There were two dollar bonds totalling US$2.825bn and two euro bonds totalling €1.225bn.

The debt financing also included US$1bn of preferred equity, which has a 14.5% PIK coupon, plus a US$750m revolving credit facility.

LSE’s all-scrip acquisition of Refinitiv values the latter at about US$27bn, including net debt of around US$12.5bn, the announcement said.

The stock purchase agreement provides for LSE to acquire Refinitiv from Refinitiv Holdings in exchange for ordinary and exchangeable shares to be issued by a subsidiary of LSE.

The shares to be used to buy Refinitiv have a total value of approximately US$14.5bn based on LSE’s ordinary share price volume weighted average price (VWAP) from July 1 to July 26.

Within 30 days prior to completing the acquisition, LSE has the option to pay for up to US$2.5bn of the transaction using cash with reference to the VWAP of LSE’s ordinary shares.

The acquisition is subject to conditions, including approval from LSE shareholders, competition approvals including those from the European Union and the US and financial regulatory approvals, including those from the United Kingdom, the United States, France and Italy.

LSE shareholders are expected to vote on the transaction in a general meeting to be scheduled before the end of this year.

After the transaction is completed, Thomson Reuters, Blackstone and investors in the Blackstone consortium, which include GIC and Canada Pension Plan Investment Board, will together own an economic interest of around 37% of LSEG and less than 30% of its total voting rights.

If merger clearances are not obtained for the transaction LSE will pay a termination fee of £198.3m to Refinitiv Holdings. (Editing by Christopher Mangham and Prakash Chakravarti in Hong Kong)

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