LPC-Pirelli to refinance 6.8bn acquisition bridge loan

LONDON, Dec 22 (Reuters) - Pirelli is talking to banks about refinancing a 6.8bn 18-month bridge loan which financed ChemChina’s acquisition of the Italian tyremaker early next year, banking sources said on Tuesday.

ChemChina agreed to become the majority owner of the world’s fifth-largest tyre manufacturer in March, as part of a 7.3bn deal.

Discussions are in progress with lenders including JP Morgan, which was the original underwriter of the bridge loan and is co-ordinating the refinancing, the banking sources said.

The refinancing could have a tenor of three to five years and will put a more permanent capital structure in place. The deal is expected to launch early next year, they added.

The bridge loan was originally raised at a bid vehicle level, but the debt was subsequently pushed down to Pirelli, where it is being refinanced.

The bridge loan attracted 17 banks in addition to JP Morgan, according to Thomson Reuters LPC data.

The new refinancing will be non-recourse to ChemChina, but will have elements of support from Pirelli’s Chinese owner, bankers said.

The original 6.8bn bridge loan was the largest non-recourse financing for a Chinese buyer.

A public tender offer for Pirelli’s shares was launched in September by Marco Polo Industrial Holding, a company indirectly controlled by ChemChina through subsidiary China National Tire & Rubber Co., Ltd.

Pirelli was delisted on November 6 after Marco Polo acquired 100% of its ordinary shares and 93.2% of its savings shares.

The company intends to convert the remainder into special shares, which is expected to be approved by the board at a meeting in mid February 2016. (Editing by Alasdair Reilly)