* Bankers working on debt if Avio sold to buyout consortium
* Refi, dividend payment also on cards if sale falls through
By Claire Ruckin
LONDON, Nov 20 Bankers are preparing up to 2
billion euros ($2.6 billion) of debt to back a buyout of Avio as
private equity owner Cinven presses ahead with its
sale of the airplane parts supplier, banking sources said on
Avio asked regulators for authority to list in October 2011
and again in May 2012, after market conditions deteriorated. The
company has until May 2013 to launch an IPO but is also working
on a sale as one of its alternative options.
Bankers are pressing ahead with debt packages in case a
private equity consortium of CVC Capital Partners, Clessidra and
state-backed Fondo Strategico Italiano (FSI) lands the sale,
despite General Electric emerging as a front runner to
buy the company..
French group Safran, which has interests in
airplanes, aerospace and defence, has also been close to Avio,
some analysts say.
Bankers are also working on options in case the sale falls
through, including refinancing the company's debt and allowing
Cinven to pay itself a dividend, known as a dividend
recapitalisation, bankers said.
"In its current form Avio is a strong credit and it could do
a dividend recapitalisation if other options fall away. It is
obviously on people's radar screens," one of the bankers said.
A second banker added: "There are a lot of options available
to Cinven including the equity markets, a sale or a dividend
recap. Avio has been on and off the block for a long time and
bankers are waiting to see what route the seller takes.
"Anything is viable."
If a sale to private equity goes ahead, the buyout will be
backed by between 1.5 and 2 billion euros of debt accessed
through leveraged loans and high-yield bonds.
The Italian company has a large revenue stream from the
United States so a significant part of the debt will be
denominated in dollars.
The deal is also likely to be "covenant lite", similar to
other deals in the United States at the moment and typical of a
strong market. They are more favourable to borrowers as they do
not contain as many restrictions on servicing the debt.
Avio, based in Turin in northern Italy, supplies engine
parts for the Eurofighter Typhoon and for General Electric and
It had 2011 revenue of more than 2 billion euros and
adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) of 384.2 million euros.
Cinven bought Avio in 2006, backed by 2.1 billion euros of
debt, according to Thomson Reuters LPC data. Cinven owns 81
percent of the company, state-controlled defence company
Finmeccanica owns 14 percent and other shareholders own 5