LONDON, Jan 24 (Reuters) - Five banks have lined up approximately €7bn-equivalent of debt financing that will be offered to buyers in a potential sale of Akzo Nobel’s chemicals business, banking sources said.
Bank of America Merrill Lynch, HSBC, JP Morgan, Natwest and Societe Generale are offering a staple financing to potential buyers that equates to 6.25 times the division’s approximate €1bn Ebitda, the sources said.
The staple financing comprises just over €6bn-equivalent of funded debt and around €1bn of undrawn facilities, the sources said.
The funded debt includes a combination of senior leveraged loans and subordinated high-yield bonds, denominated in both euros and dollars, in a bid to maximise access to liquidity, the sources added.
A divestment of the unit is part of an effort to placate investors after the Dutch paintmaker rejected a takeover offer from rival PPG Industries last year.
The sale has attracted a lot of interest from private equity and strategic buyers and final bids are due by March 23, the sources said.
A spokesperson for Akzo said the process was ongoing and the company planned to either sell or seek a separate stock market listing for the division by mid-April. They also said there were three to four interested bidders.
At 6.25 times, the staple financing is competitive, several sources said.
It follows a 7.0 times staple being offered by JP Morgan and Morgan Stanley to back a potential sale of French drug maker Sanofi’s European generic drug business, known as Zentiva.
Staple financings give potential buyers comfort they can finance a bid, they have however been traditionally seen as something to beat by other non-staple banks.
“Staples are usually seen as a first stab and open to competition for more aggression from other banks,” a syndicate head said.
However, at 6.25 times and 7.0 times, the staples being offered on Akzo’s and Sanofi’s divisions are highly viable financing options, the sources said.
Chemicals account for a third of Akzo’s sales and earnings and its value is estimated at roughly €9bn. (Editing by Christopher Mangham)