| LONDON, June 11
LONDON, June 11 A 7.6 billion euro-equivalent
($10.35 billion) loan that finances Dutch coffee and tea company
DE Master Blenders' merger with the coffee business
of Mondelez International and refinances existing debt
was priced on Wednesday, bankers said.
The deal is the largest leveraged loan to be issued by a
European company since the 9 billion pounds ($15.11 billion)
buyout financing which backed the buyout of Alliance Boots by
private equity firm KKR in 2008.
Banks and funds are lining up to back Master Blenders' deal,
which is led by Bank of America Merrill Lynch, JP Morgan and
Morgan Stanley, and is expected to boost Europe's leveraged loan
market which has seen thin M&A activity in 2014.
Mondelez and Master Blenders announced in May that they
would combine their coffee businesses into a new company called
Jacobs Douwe Egberts (JDE), based in the Netherlands.
The financing includes a 500 million euro, five-year
revolving credit and a 2.9 billion euro, five-year term loan A,
both of which pay 300 basis points (bps) over Euribor.
These tranches, which are known as 'pro-rata tranches' are
among the largest seen in Europe, sources said. They will
refinance a 3.3 billion euro leveraged loan, which backed Joh A
Benckiser's (JAB) 7.5 billion euro acquisition of Master
Blenders in 2013.
Banks were asked to commit 225 million euros to the
revolving credit and term loan A, which are both already
"JAB has a lot of relationship banks. The fund community is
less known to them, which is why they wanted such a large
pro-rata piece. It has gone extremely well," a banker said.
A 3 billion euro, seven-year term loan B, and a 1.2 billion
euro, seven-year dollar-denominated term loan B are also
included which both pay 325 bps with a 75 bps Euribor/Libor
floor, which guarantees minimum returns for investors.
The term loan B is being raised from fund investors that
will be offered a 'ticking fee' until the acquisition closes in
2015, which will give some income before the M&A deal completes.
As part of the merger, Mondelez will receive around $5
billion in cash, as well as a 49 percent equity stake in JDE.
The financing was shown to investors in London on Wednesday
and will be shown to US investors on Friday, sources said.
Master Blenders was not immediately available to comment.
($1 = 0.7345 Euros)
($1 = 0.5956 British Pounds)
(Editing by Tessa Walsh)