April 5, 2017 / 11:22 AM / 2 years ago

LPC-Bankers prepare US$1.5bn to supplement Nature’s Bounty sale

LONDON, April 5 (Reuters) - Bankers are working on debt packages of around US$1.5bn to back a potential sale of one of the largest US herbal supplement makers, Nature’s Bounty Co, banking sources said on Wednesday.

Private equity firm Carlyle Group bought Nature’s Bounty, formerly known as NBTY Inc, in 2010 for US$3.8bn. It hired Goldman Sachs earlier this year to explore a sale that could fetch as much as $6bn.

Nature’s Bounty has a significant retail business in Europe under the banner Holland & Barrett. Although some buyers may want to buy the businesses separately, Carlyle’s preference is to sell it as a whole, the sources said.

The sale is expected to attract significant interest from buyout funds and strategic buyers and first rounds bids for the whole business are due next week in an auction process, the sources said.

Carlyle declined to comment.

Some US$1.5bn of debt financing equates to around 6.5 times Nature’s Bounty approximate US$200m Ebitda, the sources said.

Bankers are working on cross-border financings, likely to be in the form of leveraged loans, denominated solely in dollars or dollars and sterling. An all-dollar financing would see swaps put in place for a portion of sterling, the sources said.

“Nature’s Bounty is a pretty good business and Holland & Barrett is strong, so you could put 6.0-6.5 times leverage on it,” a senior leveraged finance banker said.

In February Nature’s Bounty repriced its US$1.33bn and £348m term loans at more attractive levels, taking advantage of the hot leveraged loan market to secure better terms.

The dollar-denominated loan now pays 350bp over Libor with a 1% floor, from 400bp over Libor with a 1% floor. It had sought to price as low as 300bp with a 1% floor but investors would not go that low, according to Thomson Reuters LPC data.

The sterling-denominated tranche performed better with pricing being firmed at 425bp over Libor with a 1% floor, the tight end of 425bp-450bp, with a 1% floor guidance. It previously paid 525bp over Libor, with a 1% floor.

Bank of America Merrill Lynch led that deal, alongside Barclays, Credit Suisse, Morgan Stanley, Jefferies and Mizuho.

New York-based Nature’s Bounty, whose brands include Solgar and MET-Rx, has roughly US$3bn in sales. (Editing by Christopher Mangham)

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