March 27, 2018 / 10:49 AM / a year ago

Banks line up €7.3 billion debt for Akzo Nobel chemicals unit buyout

LONDON (LPC) - Banks have lined up to €7.3bn-equivalent of debt financing to back the buyout of Akzo Nobel’s (AKZO.AS) specialty chemicals business, banking sources said.

General view of the outside of AkzoNobel's new paint factory in Ashington, Britain September 12, 2017. REUTERS/Phil Noble

Akzo Nobel announced on Tuesday the sale of 100% of the business to private equity firm Carlyle Group (CG.O) and Singapore’s GIC, for a slightly better than expected enterprise value of €10.1bn.

Barclays, HSBC and JP Morgan are leading the jumbo financing alongside Citigroup, Credit Suisse, Deutsche Bank, RBC and UBS, the sources said.

Other banks could also join the financing, given its vast size.

The financing equates to around 6.4 times the unit’s approximate €1bn Ebitda and is set to comprise €6.5bn-equivalent of funded debt and around €700m-€800m of undrawn facilities.

The funded debt is expected to include around €5bn-equivalent of senior leveraged loans, mostly denominated in dollars to match cashflows, but will still likely include up to €1.5bn-€2bn of euro-denominated loans.

The funded debt will also include around €1.5bn-equivalent of subordinated high-yield bonds.

The loans are expected to launch for syndication to investors before the summer.

Carlyle declined to comment on the financing.

The sale delivers one of the biggest commitments made by Akzo Nobel in its defense against a €26bn takeover offer from rival PPG Industries (PPG.N) last year.

Editing by Christopher Mangham

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