LONDON, March 25 Blackstone is set to take a 320 million euro ($441.07 million) dividend payment from its Dutch trust and corporate management business Intertrust Group a year after acquiring the business, banking sources said on Tuesday.
A dividend recapitalisation, a process that refinances a company's existing borrowings and adds debt to it to enable a dividend to be taken, was launched on Monday for Intertrust. Deutsche Bank, Bank of America Merrill Lynch and Nomura are running the process. [ID: nL5N0ML41R]
Dividend recapitalisations have proven popular in Europe's leveraged loan market due to a lack of M&A activity as it allows owners to realize some value in their investment.
A bank meeting is due to take place in London on Wednesday to showcase the deal to new and existing lenders and commitments to the deal are due by April 4, the sources said.
Blackstone declined to comment.
As part of the recapitalisation, Intertrust's existing 540 million euro term loan B will be refinanced and increased by 42 million euros to 582 million euros. The company will also raise a new 255 million euro second-lien facility, the sources said.
Second-liens have not been seen in Europe since the onset of the financial crisis but have been making a return in recent financings, providing a welcome relief to institutional investors in search of yield amid tighter pricing on senior debt due to a supply/demand imbalance. Issuers like it because it is cheaper than mezzanine and has less restrictive call periods than high-yield bonds.
Around 70 percent of Intertrust's new loans will be denominated in euros with the rest in dollars.
The dividend recapitalisation will take Intertrust's debt to earnings to around 4.8 times on the senior loans and 6.7 times in total from a current level of 4.5 times. After Blackstone's buyout, debt to earnings stood at 5.3 times, the sources added.
"Intertrust is a very cash generative business which deleverages very quickly," one of the sources said.
Blackstone agreed to buy Intertrust from Dutch private equity firm Waterland for around 675 million euros in 2012, backed with a 512 million euro loan. It raised an additional 200 million euro add-on facility in 2013 to fund Intertrust's acquisition of fiduciary, management and administration services provider ATC Group from HgCapital.
Founded in 1952, Intertrust's core business is to set up and manage holding companies. ($1 = 0.7255 Euros) (Editing by Christopher Mangham)