RLPC-Bankers cook up 600 mln stg debt for Pizza Express sale

LONDON, June 6 Fri Jun 6, 2014 11:19am EDT

LONDON, June 6 (Reuters) - Bankers are working on debt financing packages of up to 600 million pounds ($1.01 billion) to back a potential sale of restaurant chain Pizza Express, banking sources said on Friday.

Private equity firm Cinven acquired Gondola, which owns Pizza Express and other well-known UK restaurant chains, in a public to private transaction in 2007 for 1.3 billion euros ($1.77 billion).

It has now put Pizza Express up for sale in a process expected to fetch around 1 billion pounds, the banking sources said.

The sale has attracted interest from a number of potential buyers eager for deals after a lack of M&A so far this year. Two private equity firms and one trade buyer are expected to have made it through to the final round of an auction process on June 26, the banking sources said.

Cinven and Pizza Express were not immediately available to comment.

Bankers are considering leveraged loans and high yield bonds, fully denominated in sterling, to back a buyout totalling 5.5-6 times Pizza Express' earnings before interest, taxes, depreciation and amortisation (EBITDA) of approximately 90-100 million pounds, the banking sources said.

"There is enough capacity in the sterling market for a deal of this size at the moment," one of the banking sources said.

This is the latest sale of a Gondola asset after last year's sale of UK burger restaurant chain Byron to Hutton Collins for 100 million pounds. Gondola, a prominent player in the UK casual dining sector, also owns ASK, Zizzi and Kettner's, according to Cinven's website. ($1 = 0.5956 British Pounds) ($1 = 0.7345 Euros) (Editing by Christopher Mangham)