April 12, 2018 / 3:29 PM / 9 days ago

Macquarie's sale of German metering firm Techem in final round -sources

FRANKFURT/LONDON, April 12 (Reuters) - Macquarie picked three suitors for a final bidding round for the sale of German metering group Techem, which may be valued at around 4 billion euros ($4.9 billion), people close to the matter said.

A consortium comprising buyout firm CVC, Canada Pension Plan Investment Board (CPPIB) and Government of Singapore Investment Corporation (GIC) as well as another group that includes Ontario Teachers’ Pension Plan (OTPP) and the Caisse de dépôt et placement du Québec (CDPQ) and Partners Group has prevailed in the auction, the people added.

Separately, buyout group Silver Lake is still competing for the asset, they said.

Macquarie bought Techem in 2007 for 1.5 billion euros. Bidders are hoping to strike a deal to it at a valuation of 3.9-4.2 billion including debt or 11-12 times earnings.

Techem is expecting to report 2018 adjusted EBITDA of 350 million euros on sales of 796 million, the sources said.

Macquarie and the bidders declined to comment or were not immediately available for comment.

CVC is the former owner of Techem rival Ista, which the buyout group sold to Hong Kong’s CK Infrastructure last year.

Techem conducted a 1.75 billion euro leveraged loan refinancing in July 2017 that comprised a 1.6 billion euro term loan and a 150 million revolving credit facility. It had net leverage of 4.7 times EBITDA and gross leverage of 5 times core earnings (EBITDA).

In an unusual move it was offered with portability to enable the financing to stay in place in the event of a sale. The portable financing also provided for an extra 1 billion euros of debt to be raised on top of the term loan in the event of a sale, without requiring lender approval.

That would push leverage as high as 5.5 times through the senior and 7.5 times in total.

The additional financing could include senior loans and subordinated debt.

Even if Techem’s leverage rises as high as 7.5 times, some bankers are working on new and even more ambitious debt packages for the company, which would replace the portable financing.

Bankers are working on debt financing for Techem in excess of 8.0 times EBITDA, which would take total debt to around 3 billion euros. ($1 = 0.8120 euros) (Reporting by Arno Schuetze and Claire Ruckin. Editing by Jane Merriman)

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