June 4, 2020 / 9:43 AM / 2 months ago

Banks prep €2.2bn debt as eBay classified unit sale proceeds

LONDON, June 4 (LPC) - Bankers are preparing debt financings of around €2.2bn to back a potential sale of eBay’s classified-ads business as a number of parties make it through to the second round of bidding, banking sources said.

eBay said in February it was in discussions with multiple candidates regarding a potential transaction for its classified-ads business and expected to update investors by the middle of 2020.

The unit has a price tag of around US$10bn, which could make it one of the largest leveraged buyouts of the year.

The bidders expected to have made it through include two consortia. One comprises Blackstone, Hellman & Friedman and Permira. The other includes trade buyer Prosus and buyout firm General Atlantic, while Apax could also be part of the group. Trade buyer Adevinta is also through to the next stage, sources said.

The second round of bidding in an auction process is due in early July, the sources said.

All of the potential buyers either declined to comment or were not immediately available to comment. eBay was not immediately available to comment.

Bankers are working on debt financings totalling around 5.0-5.5 times the unit’s approximate €400m Ebitda.

The debt financing is expected to comprise leveraged loans and high-yield bonds to maximise liquidity.

While it is preferable for the financing to be raised solely in euros, some bankers fear there may not be enough capacity in the European market given the effects of the Covid-19 pandemic and the deal may be offered in the US to tap into dollar liquidity.

“It is an all euro business, but it is an open question as to whether it is too big to do an all euro financing,” a syndicate head said.

The deal is likely get a high Single B rating, which will attract interest from a wide number of investors looking to bulk up on high quality loans, especially CLOs that have been inundated with B3 and Triple C rated deals.

It adds to the growing list of deals starting to emerge as companies tap a relatively stable window of opportunity to conduct M&A processes, in case a much feared second wave of the coronavirus hits later in the year, several bankers said. (Editing by Christopher Mangham)

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