LONDON Italian-regulated gaming company GTECH GTCH.MI is backing its $4.7 billion cash and stock acquisition of U.S. based International Game Technology (IGT) (IGT.N) with a $10.7 billion bridge loan.
The deal is the second-biggest acquisition financing in Europe, the Middle East and Africa this year after a $14.2 billion loan for Bayer (BAYGn.DE) which financed its acquisition of US-based Merck's (MRK.N) consumer care business.
GTECH's financing, which will also be used to refinance existing debt, is initially being provided by Credit Suisse, Barclays and Citigroup.
The loan will finance the $3.7 billion cash consideration of the acquisition, $1.3 billion will be used to backstop an IGT bond, 2.5 billion euros ($3.38 billion) will backstop a GTECH bond and $600 million will be used to backstop drawn loans.
The fees on the bridge loan are 1.5 percent.
The bridge loan is expected to be repaid mainly by issuing euro and dollar-denominated bonds, depending on the company's rating post acquisition.
GTECH expects to have leverage of 4.5 to 4.9 times net debt to Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) at closing. Synergies are expected to cut leverage by around 0.5 times.
Credit Suisse is lead financial advisor to GTECH and left lead arranger and bookrunner on the financing.
Barclays and Citigroup are also financial advisors and acting as joint-lead arrangers, joint bookrunners and co-syndication agents on the financing.
The acquisition is expected to close in the first half of 2015.
Under the merger, IGT and GTECH will combine under a newly formed UK holding company which will have its corporate headquarters in the United Kingdom and operating headquarters in Las Vegas, Providence and Rome.
The combined entity will have more than $6 billion of pro-forma revenues and more than $2 billion of pro-forma EBITDA.
($1 = 0.7394 Euros)
(Editing by Tessa Walsh)