LONDON Aug 6 German plastics maker Styrolution
said on Thursday that it has withdrawn syndication of a 1.6
billion euro (2.14 billion US dollar) leveraged loan, which is
the first casualty of a summer slowdown in Europe's leveraged
Styrolution's loan has been put on hold due to changed
market conditions. Europe's leveraged loan market had a busy
July with around 25 deals in the market which allowed investors
to cherry pick the best deals.
Banks were forced to increase pricing on riskier deals by
around 50 basis points (bp) and widen discounts to place deals
that got a lukewarm response from investors. [ID: nL6N0QA496]
The deal, which refinances existing senior debt and finances
Ineos' $1.5 billion buyout of BASF's 50 percent stake
in the company it does not already own, is likely to be
relaunched in September, two investors said.
Styrolution is a styrenics supplier and produces expandable
polystyrene for the building and packaging sectors. Some
investors view it as higher risk as it operates in a cyclical
business, bankers said.
"Styrolution is a pure commodity play and a massively
cyclical business. There is way too much debt on the business -
the company's numbers have literally doubled and halved in the
course of the past few years," one of the bankers said.
Global co-ordinators Citigroup and Credit Suisse and lead
arrangers Barclays, HSBC and JP Morgan considered sweetening the
terms of the deal to help it sell to investors, but opted to put
the deal on hold instead, bankers said.
Some of the changes included removing a proposed 100 million
euro dividend payment to Ineos, cutting the size of a 1.6
billion euro first lien loan and adding around 250 million euros
of second lien loans to reduce senior leverage, the bankers
Pricing on the deal was increased in July to attract
investors and could be increased further, bankers said.
Styrolution was set up as a joint venture between Ineos and
BASF in 2011. Ineos agreed to buy the other half of Styrolution
to gain full ownership of company on June 30.
The acquistion is expected to close in the fourth quarter.
(1 US dollar = 0.7487 euro)
(Editing by Tessa Walsh)