| LONDON, July 18
LONDON, July 18 British cigarette maker Imperial
Tobacco is set to launch loans totalling $13.1 billion
to back its acquisition of selected brands and assets from
Reynolds American Inc, the lead banks said in a
statement on Friday.
The deal is the second-biggest acquisition loan of the year
in Europe, the Middle East and Africa, after a $14.2 billion
loan for Bayer, which financed its acquisition of
US-based Merck's consumer care business, according to
Thomson Reuters LPC data.
It is also the biggest loan of the year so far for a UK
company, the data shows.
The jumbo financing will cover the $7.1 billion acquisition
and refinance Imperial's existing core bank borrowings, which
provide working capital and funds for general corporate
Imperial agreed to acquire a portfolio of U.S. cigarette
brands, Winston, Maverick, Kool, Salem and U.S. and
international e-cigarette brand blu from Reynolds on Tuesday
after Reynolds announced its merger with Lorrilard.
Imperial will also take over Lorrilard's national sales
force, offices and production facilities.
The financing has been underwritten equally by bookrunners
and mandated lead arrangers BNP Paribas Fortis, Royal Bank of
Scotland and Banco Santander.
Royal Bank of Scotland is also facility agent on the
The acquisition financing includes a $4.1 billion term loan
with a one-year maturity and a one-year extension option; a $1.5
billion, three-year term loan and a $1.5 billion, five-year
The refinancing and working capital facilities include a 1
billion euro ($1.35 billion) revolving credit facility with a
maturity of 18 months and three six-month extension options and
a 2.835 billion euro, five-year revolving credit with two
one-year extension options.
A 500 million pounds ($854.55 million) five-year revolving
credit with two one-year extension options is also included.
BBB/Baa3 rated Imperial expects to maintain an investment
grade credit rating on its debt after the acquisition.
The company may refinance all or some of the loans before
the acquisition closes, which is expected in six to nine months.
Imperial has suspended a share buy-back programme of 500
million pounds a year to speed its debt repayment.
Imperial's core bank facility was a 2.458 billion pounds
-equivalent revolving credit that was due to mature in December
2015. The financing was originally arranged in December 2010 via
bookrunners Barclays and Royal Bank of Scotland.
That deal comprised a $632 million facility, a 600 million
facility and a 1.785 billion euro facility, all of which paid
margins of 100 basis points (bps) over Libor/Euribor.
The new loan has allowed Imperial to reduce its overall
funding cost as the refinancing element was agreed at lower
pricing to the existing facilities, Imperial said on Tuesday.
($1 = 0.7394 Euros)
($1 = 0.5851 British Pounds)
(Editing by Tessa Walsh)