RLPC-European Directories seeks 152 mln euro loan for TRUVO buy

By Zaida Espana

LONDON, May 2 (Reuters) - European Directories, the publisher owned by Australia's Macquarie Capital MCQ.AX, is asking its banks to allow a new 152 million euro loan backing its acquisition of TRUVO Nederland to be added to its existing debt, banking sources said on Friday.

Macquarie is acquiring TRUVO Nederland with a view to merging Truvo's Gouden Gids directory business with its De Telefoongids unit, another search and advertising firm in the Netherlands.

Add-on loans allow private equity firms to keep raising small amounts of debt from existing lenders at current market rates, without having to refinance larger existing loans on less favourable terms in a difficult credit environment.

Add-on loans are expected to be seen more frequently moving forward, as private equity firms concentrate on growing their portfolio companies using 'buy and build' strategies that avoid paying punitive market rates on larger loans.

The 152 million euro senior add-on loan has been launched to banks and funds by arranging banks ABN AMRO, BNP Paribas, Lloyds TSB and Merrill Lynch, sources said.

It pays a margin of 400 basis points over EURIBOR, and will mature in September 2014, sources said. Bankers will be paid 10 basis points (bps) to approve the waiver, and a 40 bps fee if the acquisition goes through.

European directories buyout loans have historically carried high leverage levels. The TRUVO acquisition will reduce leverage from 7.5 times to 7.2 times on a proforma basis, bankers said.

European Directories is also taking the opportunity to reset two of its loan covenants to accomodate rapid growth, bankers said.

The company is looking to increase headroom on its interest cover covenant to around 25 percent and capital expenditure covenants are being reset to allow an increase to 45 million euros in 2008 and 40 million euros thereafter, the sources said.

European Directories is also financing the acquisition through an equity rights issue. Macquarie will take up 40 percent of European Directories' rights issue entitlement for approximately 30 million euros and will own 34 percent of European Directories following completion.

European Directories' purchase price for TRUVO Nederland implies an enterprise value of 290 million euros, including a deferred component of 10 million euros. (Editing by Quentin Bryar)