* Seeks long-term funding to refinance bulk of Beam purchase
* To raise Y300 bln in subordinated yen, dollar loans
* State-run JBIC considering buying subordinated loans
(Combines previous stories, adds context)
By Taiga Uranaka
TOKYO, May 8 Suntory Holdings Ltd
aims to raise more than 800 billion yen ($8 billion) in debt to
finance its purchase of U.S. spirits company Beam Inc, Japan's
third-biggest outbound deal ever, people with knowledge of the
deal said on Thursday.
The privately held beverage company is tapping a range of
lenders to buy senior and subordinated loans in yen and dollars,
as well as dollar bonds, to ensure longer-term funding of its
recently completed $13.6 billion purchase of the maker of Jim
Beam and Maker's Mark bourbons, the people said.
The fund-raising is to refinance the bulk of a $12.5 billion
bridge loan, which was arranged and underwritten by Bank of
Tokyo-Mitsubishi UFJ, the people said. Including the assumption
of Beam's net debt, Suntory's purchase is valued at $16 billion.
Moody's Japan K.K. last week downgraded the creditworthiness
of Suntory's debt to Baa2 from A3, given the "high financial
leverage from the acquisition," which has made the company the
world's third-biggest spirits maker.
"It will take the company several years to bring leverage
down to a level more appropriate for a higher rating," said
Moody's credit analyst Mariko Semetko.
In addition to the U.S. bourbon brands, the purchase,
announced in January, brings together Beam's Courvoisier cognac
and Sauza tequila with Suntory's Yamazaki, Hakushu, Hibiki and
Kakubin whiskies, Bowmore Scotch and Midori liqueur.
Suntory last year floated its food and non-alcoholic drinks
company, Suntory Beverage & Food, to raise money for
For its purchase of Beam, Suntory aims to sell 400 billion
yen worth of senior loans and 300 billion yen of subordinated
loans in the Japanese and U.S. currencies, and 100 billion yen
worth of dollar bonds, the people said.
The company and its lenders are still discussing details,
and the final figures could change, they said.
Japan's three "megabanks," including Mitsubishi UFJ
Financial Group Inc, as well as regional banks and life
insurance companies are participating in the planned funding,
the people said.
Of the subordinated loans, the state-run Japan Bank for
International Cooperation (JBIC) is considering buying 200
billion yen worth, they said.
Suntory and JBIC spokeswomen declined to comment on the
deal. Representatives of the lenders were not immediately
available for comment.
Subordinated loans have a lower priority in terms of
repayment if a borrower faces financial difficulties. As they
are considered akin to equity, borrowers can count a portion of
their subordinated loans as capital.
JBIC provides foreign-currency lending to Japanese companies
for overseas acquisitions. The lender extended $1.5 billion in
loans for air-conditioning and heating system maker Daikin
Industries Ltd's $3.8 billion acquisition of
Texas-based Goodman Global Inc in 2012.
For Japan's commercial banks, merger-and-acquisition finance
is a bright spot as loan demand is recovering only tepidly at
home and margins are being squeezed by competition.
Japanese companies have been on a buying spree as the
economy has recovered under Prime Minister Shinzo Abe. SoftBank
Corp spent $21.6 billion to buy No.3 U.S. mobile
operator Sprint Corp last summer and wants to follow that
up with an acquisition of No.4 T-Mobile US Inc.
(Editing by William Mallard)