LONDON, June 4 (LPC) - UK cinema chain Vue International has opted for euro term loans as part of a revamped £878m-equivalent refinancing, shunning the sterling market following investor feedback.
This is Vue’s second attempt to tap the loan market after it pulled a £833m-equivalent debt package in December last year due to volatile market conditions.
“Vue has maturities to deal with so it makes sense to do this refinancing now,” a senior banker said.
The refinancing will comprise an approximate £550m-equivalent euro-denominated term loan B and a €114m delayed draw term loan B. Shareholder OMERS will also provide £165m, second-lien PIK notes.
Vue’s first refinancing attempt comprised a £300m TLB guided at 500bp-525bp over Libor, as well as a €480m term loan B and a €114m delayed-drawn facility, guided at 425bp-450bp over Euribor. All were offered with a 0% floor at 99 OID.
The sterling term loan has been removed from the new structure and Vue will instead raise euros and put currency swaps in place, banking sources said.
Investors have been wary of sterling loans due to uncertainty in the current economic environment, unable to be tempted by the usual pricing premium associated with it.
JP Morgan, Morgan Stanley and Lloyds Bank are bookrunners on the deal, which has corporate ratings of B3/B-.
Pricing on the term loans will emerge at a bank meeting on June 5. An existing £60m equivalent super senior revolving credit facility will also be refinanced on a senior secured basis and increased to £65m.
Proceeds of the transaction refinances Vue’s €120m TLB, €360m of senior secured FRNs and £300m senior secured notes. It will also refinance a €114m delayed draw tranche, which finances a majority of Vue’s €130m acquisition of CineStar, new site expansion and associated fees and expenses. The refinancing is leverage neutral.
OMERS Private Equity and Alberta Investment Management acquired a 74% holding in Vue for £935m in 2013. Vue’s management owns the 26% stake.
Vue generated £220.9m in turnover in the first quarter as end of February, 10.6% lower than the same period of last year. LTM Ebitda reached £110.4m with net leverage of 5.7 times, according to the company’s website. (Editing by Christopher Mangham)