IFR-UK's Priory Seen Among Early '11 High-Yield Bonds -sources

LONDON, Jan 4 (IFR) - Buyout firm Advent International is nearing a deal to purchase UK healthcare group the Priory from the Royal Bank of Scotland, which is expected to be funded in the high-yield bond market possibly as soon as this month, sources familiar with the matter said on Tuesday.

Credit Suisse, Deutsche Bank and Royal Bank of Scotland are expected to be the lead bookrunners on a possible bond issue, the sources said. A number of other banks are also talking to Advent and will likely play a smaller role in the bond syndication, one of the sources said.

“As with any M&A process, you keep your fingers crossed that it goes through,” said the first source.

RBS RBS.L, which acquired Priory when it bought ABN AMRO in 2007, has been seeking about GBP1bn for the business, which it is selling as part of a push to slim its balance sheet and shed non-core assets.

The 83% state-owned UK bank received indicative bids from a number of suitors -- including Bain, Blackstone and Advent -- in September but they fell short of expectations, the second source said.

Bain had been the frontrunner for the Priory, but talks between the private-equity group and RBS ended early in December after failing to agree on the sale price for the second time, the second source said [ID:nLDE6AT1MW].

Bain was being advised by JPMorgan and financing had been expected to rely heavily on sterling-denominated high-yield bonds led by Bank of America Merrill Lynch, JPMorgan, Morgan Stanley and RBS involved, sources told Reuters in November.