LONDON, May 17 (Reuters) - Bankers are preparing around €800m of debt financing to back a potential sale of German packaging group Constantia Labels, banking sources said.
Wendel hired Goldman Sachs on the sale of the group, which is part of a larger packaging firm Constantia Flexibles. First round bids in an auction process are due at the end of May.
Some €800m of debt financing equates to around 6.5 times Constantia Labels’ expected €113m Ebitda, including undrawn debt, the banking sources said.
Leveraged loans and high-yield bonds are both being considered, the sources said.
Wendel was not immediately available to comment.
Constantia Flexibles was acquired by Wendel for €2.3bn in 2014, after a planned initial public offering by former owner OEP had failed a year earlier.
While the combination of the beverages and food labels operations with the food packaging business made sense at the time of the planned IPO to present an attractively-sized company to investors, synergies are limited between the two parts, which were separated last year.
Constantia Labels posted a 2016 Ebitda of €100.8m last year on sales of €605m. According to its business plan, Ebitda could grow to €167m by 2021. (Editing by Christopher Mangham)