RLPC-Alliance Boots banks sell part of 9.02 bln pounds loan

LONDON May 16 (Reuters) - The eight-strong bank group behind Alliance Boots' [AB.UL] 9.02 billion pounds hung buyout financing has already sold some of the first and second lien loans to investors and expect to announce further sales early next week, banking sources close to the deal said.

The banks could announce the sale of just under half of the 9.02 billion pound ($17.55 billion) buyout loan, that was stranded in mid-2007 by the credit crunch, as early as next Monday, sources said.

"The good news is that something is coming together. We have a number of outright cash bids in and levered bids. It will probably be Monday's business before it is settled," a syndicate head said.

The eight banks have already sold some of a 2 billion euro ($3.10 billion) carveout of the first lien loan that was shown to institutional investors earlier this week, sources said.

"I already got some first lien this week," a leading institutional investor said.

The leads also sold around 2 billion pounds of the company's first lien loan to a consortium of private equity funds including Apollo Management, Blackstone (BX.N) and Texas Pacific Group [TPG.UL] on Thursday, banking sources said.

The private equity consortium bought the first lien loan at 90-91 percent of face value, with some buyers taking as much as 500 million pounds each, sources added.

The arranging banks also sold around 600 million pounds of the second lien to Goldman Sachs' mezzanine fund in a single cash sale at 85 percent of face value, sources said.

Some sales are still in process, as investors required additional trading information, and are expected to be announced on Monday, sources said.

SOME BANKS HOLD

Efforts to sell the first and second lien loan were so successful that some of the eight banks decided not to sell at all, sources said.

"Efforts on the euro senior debt were successful. It appears that they were successful enough that some of the arrangers said they were not selling," an institutional investor said.

The sales were executed with no investor protection, known as 'Most Favoured Nation' status, which was a sticking point of earlier negotiations.

The bids received were a mix of cash and leveraged bids, which require the seller to provide financing to the buyer which boosts returns.

Cash sales are preferable as they are cheaper for the bank sellers, but some banks have offered leveraged to private equity buyers buying large 500 million pound chunks, sources said.

It is not clear whether the private equity buyers will use existing financing lines or whether the arranging banks will provide new financing on a single name basis, sources added.

The 9.02 billion pounds loan backed the 11 billion buyout of the UK chemist chain by U.S. private equity firm Kohlberg Kravis Roberts and Boots Deputy Chairman Stefano Pessina in April 2007.

It was provided by eight banks - Deutsche Bank, J.P. Morgan, UniCredit (HVB), Barclays Capital, Citigroup, Bank of America, Merrill Lynch and Royal Bank of Scotland.

(Reporting by Tessa Walsh; editing by Sue Thomas)