LONDON, Dec 11 (LPC) - Banks are struggling to sell a £305m leveraged loan financing backing CapVest Partners’ acquisition of Young’s Seafood, banking sources said.
Barclays is leading the financing, alongside Goldman Sachs and RBC, which equates to around 4.5 times Young’s approximate £70m Ebitda.
Banks struggled to get support from institutional investors during syndication and have since approached direct lenders to see if they want the loan, but have been unable to find a price point they can agree on.
Although the loan was underwritten on an all-senior basis, banks are now considering including a junior position to make the deal move attractive to investors. The company has also performed well recently, which could help a sell down process, the sources said.
“If you keep flogging a deal it is hard to get people to engage but Young’s Seafood has seen pretty good trading so that could help to re-engage people and find a level,” a banker said.
In an unusual move, banks offered the financing terms in November 2018 but there was a long delay in Capvest signing the M&A agreement, which took place in July.
There was a long availability period that extended banks’ operational risk. Typically, a borrower will sign an M&A agreement within a financing availability period, which is anywhere between 10-31 days, but on this occasion, it was more than six months.
Within that time, the loan market widened but banks felt compelled to honour the financing terms they had set out previously, sources said.
“Normally M&A is signed within a countersigning period but in Young’s instance there was a long delay. It is an anomaly of history that won’t be repeated,” a banker said.
CapVest was not immediately available to comment.
CapVest agreed to buy Young’s from Bain Capital, HPS Investment Partners and Lion Capital, following a sale process.
CapVest owns pork processor Karro, which will be combined with Young’s Seafood to form a larger food group, the sources said. (Editing by Christopher Mangham)
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December 11, 2019 at 08:03PM
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Banks struggle to sell loan backing Young’s Seafood buy - Reuters
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