LONDON May 13 Banks have lined up around 7.5 billion euros ($10.32 billion) of loans to refinance debt in Dutch coffee and tea company DE Master Blenders 1753 and back its merger with the coffee business of Mondelez International , banking sources said on Tuesday.
Bank of America Merrill Lynch, JP Morgan and Morgan Stanley are leading the financing which is expected to launch for syndication to other banks and institutional investors in the coming weeks, the banking sources said.
As part of the merger, Mondelez will receive around $5 billion in cash, as well as a 49 percent equity stake in the new company, which will be called Jacobs Douwe Egberts.
The $5 billion of cash is expected to be in the form of a leveraged loan denominated in euros and dollars. It will form part of a larger financing package as Master Blenders refinances a 3.3 billion euro loan put in place last year to back a 7.5 billion euro acquisition by Joh A Benckiser, the banking sources said.
The 3.3 billion euro leveraged loan was arranged by Bank of America Merrill Lynch, Citigroup, Rabobank and Morgan Stanley and comprised a 1.25 billion euro Term Loan A, a 300 million euro revolver; a 1 billion euro institutional Term Loan B2, all paying initial margins of 350bp over Euribor; along with a 750 million euro Term Loan B1 paying 375bp.
The new loan is also expected to include around 500 million euros of a undrawn facilities.
Jacobs Douwe Egberts will be run by the current management of D.E Master Blenders and will be based in the Netherlands. The new company will focus on the grocery and home-brewing side of the global coffee business. ($1 = 0.7270 Euros) (Additional reporting by Alasdair Reilly; Editing by Christopher Mangham)