LONDON, Feb 13 (Reuters) - Banks are expected to launch a €4.6bn-equivalent leveraged loan within the next week that backs US private equity firm KKR’s acquisition of Unilever’s margarine and spreads business, banking sources said.
KKR agreed to buy the unit for €6.83bn, it was announced in December, backed with a €5.65bn-equivalent leveraged loan and bond financing.
The highly anticipated €3.9bn-equivalent seven-year covenant-lite term loan -- which will be mainly denominated in euros and will include some US dollars, sterling and Polish zloty -- is set to launch for syndication to investors shortly, followed by a sale of €1.050bn of senior unsecured notes. The financing also comprises a €700m revolving credit facility.
A bank meeting is expected for next week and pricing on the euro term loan is expected with a three handle, the sources said.
The €3.9bn facility will become the largest single-tranche euro-denominated term loan B since the financial crisis, outstripping a €1.86bn seven-year term loan B backing Hellman & Friedman’s DKr33.1bn (US$5.3bn) take-private of Danish payments firm Nets.
Unilever’s term loan is expected to attract significant investor attention, due to its large size and high profile.
It also launches at a time when the market is relatively quiet. Despite a busy January, when the market processed a large number of leveraged loans, supply has since waned, with only a handful of deals.
The pipeline is building but it is unlikely that Unilever will experience competition from any of the larger loans still to be syndicated. A £2.35bn loan backing multinational sports betting and gaming group GVC Holdings’ acquisition of UK betting group Ladbrokes Coral, is not set to launch until early March.
“Unilever is so large it would command attention no matter what else is happening in the market. It is what everyone has been waiting for, however it so happens the market is relatively quiet which is going to help it even more,” a syndicate head said.
Credit Suisse, Deutsche Bank and KKR Capital Markets are leading the debt financing, alongside BNP Paribas, Credit Agricole, Goldman Sachs, HSBC, ING, Lloyds, Mizuho, RBC, Societe Generale and UniCredit.
The brands of the margarine and spreads business include Becel, Flora, Country Crock and Blue Band.
Unilever put the business up for sale in April 2017, following a review of its assets prompted by February’s unsolicited US$143bn takeover attempt by Kraft Heinz.
Editing by Christopher Mangham