December 1, 2016 / 4:20 PM / a year ago

REFILE-LPC-Banks line up 1.5bn loan to back Lone Star's Xella buyout

(Fixes headline)

By Claire Ruckin

LONDON, Dec 1 (Reuters) - Banks are lining up around 1.5bn of leveraged loans to back buyout group Lone Star’s acquisition of Germany-based building materials maker Xella, banking sources said on Thursday.

Lone Star agreed a deal to buy Xella from PAI Partners and funds managed by Goldman Sachs’ investment arm for around 2.2bn, beating off competition from Bain Capital, Apollo and Blackstone in an auction launched in September.

Banks including Credit Suisse, Goldman Sachs and Morgan Stanley are expected lead the financing, alongside other banks at various levels such as BNP Paribas, Citigroup and Natixis but the exact line up is yet to be finalised, the sources said.

The loan is likely to be an all-senior financing and at 1.5bn totals around 5.0 to 5.5 times Xella’s approximate 270m Ebitda.

The loan could be launched for syndication to institutional investors before the end of the year if the process moves quickly enough, otherwise it will be one of the first out of the blocks in January.

Lone Star declined to comment.

“It is a well known, well liked asset in Europe’s leveraged loan market,” one of the sources said.

The deal is expected to be completed in the first half of 2017 and comes after a failed attempt to float Xella on the stock exchange last year.

Xella says it is the world’s largest manufacturer of aerated concrete blocks, calcium-silicate units and high-performance boards.

The group has 96 production plants in 20 countries and employs 5,900 staff globally.

Additional reporting by Hannah Brenton; Editing by Christopher Mangham

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