April 17, 2019 / 1:24 PM / 5 months ago

Bankers ready debt as PE firms pursue Swissport sale

LONDON, April 17 (LPC) - Bankers are pitching debt financings of around €2bn to private equity firms that are approaching China’s HNA Group about a potential sale of Swiss cargo handling unit Swissport Group, banking sources said.

Cash-strapped HNA Group was considering a disposal of Swissport last year but pulled plans to float shares on the SIX Swiss Exchange in April 2018, citing “current market conditions” for the decision to defer its IPO ambitions.

A sale had also been considered and asset management firm Brookfield had emerged as a front runner, however that process went quiet and Brookfield withdrew interest, several banking sources said.

A number of sponsors are now approaching HNA about a potential acquisition, despite the lack of any formal process, the sources said.

HNA, Swissport and Brookfield were not immediately available to comment.

“The speculation is that HNA will sell out, which would be nice as no one in Swissport is fond of HNA. Everyone is wondering what HNA will do so private equity firms may as well be in their face saying there is someone who wants to buy Swissport, if they want out. Everyone in the world — banker and sponsor alike — is looking at it,” a senior banker said. PUTTING THE HOURS IN Leveraged finance bankers are swarming around the major buyout houses in an attempt to provide financing should a sale take place. Bankers are eager for large event-driven financings amid a lack of deal flow so far in 2019, the lowest level since 2009, according to LPC data.

With the pipeline sparse, they are getting more creative and competitive around potential M&A situations.

“Swissport is perhaps one of the most aggressive situations bankers are dealing with, given the man hours they are devoting to structuring and pitching a financing in the absence of an actual sale process,” a second senior banker said.

Some €2bn of financing equates to around 6.5 times Swissport’s approximate €275m-equivalent Ebitda, the sources said. Debt could be significantly higher if an infrastructure financing is put in place.

Debt could be in the form of leveraged loans and high-yield bonds, denominated in euros and dollars.

“Everything is at play on Swissport, it is a chunky deal and well known to debt investors” the second banker said.

Swissport raised a €325m term loan in March 2018. It was incremental to a €460m term loan B raised in July 2017 to refinance existing debt following a technical breach of covenants. Swissport initially raised a €660m term loan B backing its SFr2.7bn acquisition by HNA Group in 2015, from PAI Partners.

Swissport provides airport ground services for 265 million passengers annually and handles approximately 4.7 million tonnes of air cargo at 133 warehouses world-wide. It employs around 68,000 people and is active at 315 airports in 51 countries across five continents. In 2017, the group generated consolidated operating revenue of €2.8bn, according to its website.

Founded in China in 1993, HNA Group focuses on aviation-related businesses with assets and operations in the United States, Europe and Asia. (Editing by Christopher Mangham)

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