January 24, 2013 / 6:26 PM / in 5 years

RLPC-Bankers prep up to $500 million debt for Allflex deal

LONDON, Jan 24 (Reuters) - Bankers are arranging debt packages of up to $500 million to back private equity firm Electra’s potential sale of electronic animal identification firm Allflex, banking sources said on Thursday.

Rothschild has been hired to explore a sale or refinancing of Allflex, which could fetch around $1 billion

Electra bought the company in 1998 and has recapitalised the business twice, the first in 2005 when it paid itself a $238.6 million dividend and again in 2007 when it took $380 million out of the company, according to Thomson Reuters LPC data.

Information has been sent to potential buyers of Allflex which is expected to attract both private equity and trade buyers.

Bankers are working on debt packages to back a buyout should it go to a buyout house. Debt financing is likely to be around $400-$500 million in senior leveraged loans and mezzanine debt denominated in dollars and euros.

This would equate to approximately 4-5 times the company’s $100 million earnings before interest, tax, depreciation and amortization (EBITDA), the banking sources said.

Electra declined to comment.

Bankers are also working on back-up scenarios should a sale not go through, including refinancing Allflex’s existing debt or options for Electra to conduct another dividend recapitalisation.

“As well as acquisition finance, bankers are looking at a refinancing or recapitalisation of Allflex’s debt. It is always good to have back-up plans in your pocket in case a sale doesn’t go through,” one of the bankers said.

The company is a leader in electronic traceability with factories in France, Brazil, Poland and China.

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