RLPC-Bankers prepare $1.4 bln debt package for sale of GEA's HX unit-sources
LONDON Dec 6 (Reuters) - Bankers are lining up around 1 billion euros ($1.4 billion) of debt financing to back the planned sale of German industrial group GEA's heat exchangers unit, banking sources said on Friday.
Deutsche Bank was hired earlier this year to manage the sale of the unit, dubbed HX, which could fetch roughly 1.2 billion euros.
A process took place last week to get bankers familiar with the business and enable them to put debt packages together to offer to potential bidders, which are likely to include a number of private equity firms, the sources added.
Information memorandums are expected to be sent out shortly, after which first-round bids will be submitted via a competitive auction early next year, the sources added.
Debt is likely to total around 765 million euros - or 4.5 times HX's earnings before interest, taxes, depreciation and amortisation (EBITDA) of around 170 million euros - in the form of senior leveraged loans and, possibly, subordinated debt, the sources said.
In addition to this, there will be around 200 million euros of guarantee facilities, the sources said. This covers pre-installation performance guarantees on HX kit and warranties once machines supplied by the group start operating.
A number of bankers and debt investors are eager to do a deal and put cash to work following a lack of M&A in 2013.
HX makes equipment for a wide range of applications, from air conditioning to cooling towers. But GEA said in June the business was non-core and has limited synergies with its five other divisions - Food Solutions, Farm Technologies, Mechanical Equipment, Process Engineering and Refrigeration Technologies. ($1 = 0.7323 euros) (Editing by David Holmes)
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