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Primavera lines up US$220 million of loans for Stratford School LBO

NEW YORK (Reuters) - China-based private equity firm Primavera Capital has secured US$220m of loan commitments from Macquarie Group to back its leveraged buyout of US private schools system Stratford School, according to two sources familiar with the matter.

The financing is split between a US$150m term loan with a first priority claim and a US$50m term loan with a second priority claim, the sources said. The debt package will include a US$20m revolving credit facility, one of the sources added.

The transaction has already closed, according to another source familiar.

Primavera paid about US$500m for Stratford, representing a multiple of 14.5 times the company’s last 12 months Ebitda, or earnings before interest, taxes, depreciation and amortization, of approximately US$34m, the first two sources said.

Stratford was acquired from private equity firm Warburg Pincus.

Macquarie declined to comment. Stratford, Primavera and Warburg Pincus did not respond to requests for comment.

The deal comes amid a growing interest in educational assets from investors, largely Asia-based, seeking to capitalize on Eastern students’ pursuit of Western education resources.

Boston-based private equity firm Berkshire Partners in September announced it would make a significant investment in Curriculum Associates, a US provider of K-12 educational assessment and instructional materials.

Hong Kong-based buyout firm Baring Private Equity Asia last month agreed to buy Spain-based language teaching business Wall Street English from Pearson in a consortium with CITIC Capital Holdings for around US$300m.

Baring is also nearing a deal to acquire U.S. educational services company Prometric Inc from nonprofit Educational Testing Service (ETS) for roughly US$1bn, including debt, Reuters reported on Wednesday.

The debt will bring Stratford’s leverage to 4.4 times through the senior loan and 5.9 times through the junior loan, based on US$200m of funded debt.

Stratford operates schools throughout Southern and Northern California focusing on science, technology, engineering, arts and math programs for preschool through eighth grade.

Reporting by Andrew Berlin; Editing By Jon Methven

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