July 22, 2014 / 3:15 PM / 3 years ago

RLPC-Bankers prepare 2.8 bln euro debt for SIG buyout

LONDON, July 22 (Reuters) - Bankers are working on around 2.8 billion euros ($3.77 billion) of debt financing to back the potential sale of SIG Combibloc Group, the world’s second largest maker of drink cartons, banking sources said on Tuesday.

New Zealand’s richest man Graeme Hart bought SIG for $2.3 billion in 2007. Hart’s packaging conglomerate, Reynolds Group Holdings, has hired Goldman Sachs to explore options for the company, which include a sale that could fetch around $5 billion

Potential buyers will receive information on the company shortly and first round bids are expected next month, banking sources said.

The sale is expected to attract interest from several private equity firms including Blackstone, Bain, Cinven, Clayton Dubilier & Rice, CVC, EQT, KKR and TPG, the banking sources said.

Some of the buyout houses could team up and submit a joint bid given the size of the deal, they added.

SIG and Reynolds declined to comment. All of the private equity firms either declined to comment or were not immediately available to comment.

Bankers are readying debt financing of 6.5-7 times SIG’s Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) of around 400 million euros, the banking sources said.

The debt financing is expected to consist of senior and junior leveraged loans and high yield bonds, which are likely to be denominated in euros and dollars, the bankers said.

Selling SIG, which is based in Neuhausen am Rheinfall in Switzerland, would help Hart’s efforts to reduce the $18 billion debt pile that his packaging empire has accumulated in successive leveraged buyouts.

SIG manufactures aseptic carton packaging that allows juices, milk, soups and sauces to be stored for a long period of time without refrigeration. The company has around 5,100 employees in 40 countries. ($1 = 0.7427 Euros) (Editing by Tessa Walsh)

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