HONG KONG, Sept 11 (Reuters) - Banks in Asia are being approached for an up to $1.7 billion financing to back Carlyle Group-led deal to buy Focus Media Holding Ltd, the biggest ever delisting of a New York-listed Chinese company, Basis Point reported on Tuesday, citing bank sources.
U.S. buyout fund Carlyle and some of China’s top private equity funds are aiming to buy out Focus Media for $3.5 billion, a firm directly targeted by shortseller Muddy Waters.
The financing is critical to the success of the buyout plan.
Citigroup, Credit Suisse and DBS Bank are leading the three-part buyout financing, which consists of a $950 million to $1 billion term loan, a $200 million to $300 million bridge-to-bond facility and a $450 million cash bridge, Basis Point reported.
The term loan is expected to have a five-year tenor, while the bridge financings will have six- to nine-month maturities, the report added.
The company is looking to put together an underwriter group of six or seven banks and terms of the financing are likely to be finalised in about two to three weeks, Basis Point said.
At least eight banks, not including M&A advisers Citi, Credit Suisse and DBS, have been sounded out, the report said.
The deal will back a consortium of buyers which includes Carlyle, CITIC Capital Partners, CDH Investments, China Everbright Ltd, Fountainvest Partners and Focus Media chairman, Jason Nanchun Jiang.
The offer to take Focus Media private is the latest, and biggest by some distance, in a string of attempted management-led buyouts by U.S.-listed Chinese companies, whose reputation among U.S. investors has suffered after a series of alleged accounting scandals.
Private equity funds have been picking over hundreds of China firms listed in the United States, looking for viable takeover targets, but until now the deals have all been below $1 billion, largely because of difficulties getting financial backing.
When announcing the privatisation plan in mid-August, the Nasdaq-listed company stated that the three banks had asserted they were highly confident of underwriting a financing.