LONDON (Reuters) - Banks are expected to launch a 4.6 billion euro-equivalent leveraged loan within the next week that backs U.S. private equity firm KKR’s acquisition of Unilever’s margarine and spreads business, banking sources said.
KKR agreed to buy the unit for 6.83 billion euros, it was announced in December, backed with a 5.65 billion euro-equivalent leveraged loan and bond financing.
The highly anticipated 3.9 billion euro-equivalent seven-year covenant-lite term loan -- which will be mainly denominated in euros and will include some U.S. dollars, sterling and Polish zloty -- is set to launch for syndication to investors shortly, followed by a sale of 1.050 billion euros of senior unsecured notes. The financing also comprises a 700 million euro revolving credit facility.
A bank meeting is expected for next week and pricing on the euro term loan is expected with a three handle, the sources said.
The 3.9 billion euro facility will become the largest single-tranche euro-denominated term loan B since the financial crisis, outstripping a 1.86 billion euro seven-year term loan B backing Hellman & Friedman’s 33.1 billion Danish krone($5.3 billion) take-private of Danish payments firm Nets.
Unilever’s term loan is expected to attract significant investor attention, due to its large size and high profile.
It also launches at a time when the market is relatively quiet. Despite a busy January, when the market processed a large number of leveraged loans, supply has since waned, with only a handful of deals.
The pipeline is building but it is unlikely that Unilever will experience competition from any of the larger loans still to be syndicated. A 2.35 billion pound loan backing multinational sports betting and gaming group GVC Holdings’ acquisition of UK betting group Ladbrokes Coral, is not set to launch until early March.
“Unilever is so large it would command attention no matter what else is happening in the market. It is what everyone has been waiting for, however it so happens the market is relatively quiet which is going to help it even more,” a syndicate head said.
Credit Suisse, Deutsche Bank and KKR Capital Markets are leading the debt financing, alongside BNP Paribas, Credit Agricole, Goldman Sachs, HSBC, ING, Lloyds, Mizuho, RBC, Societe Generale and UniCredit.
The brands of the margarine and spreads business include Becel, Flora, Country Crock and Blue Band.
Unilever put the business up for sale in April 2017, following a review of its assets prompted by February’s unsolicited $143 billion takeover attempt by Kraft Heinz.
Editing by Christopher Mangham