October 5, 2016 / 2:37 PM / a year ago

LPC-Banks line up 2bn loans for Advent's Morpho buy

LONDON, Oct 5 (Reuters) - Banks are preparing to raise 2bn of senior loans to back Advent International’s acquisition of French aerospace company Safran’s biometrics and security business Morpho, banking sources said on Wednesday.

Advent announced it had entered into exclusive negotiations to acquire Morpho on September 29, for 2.425bn. French state bank Bpifrance will invest alongside Advent.

A host of banks will be on the financing, which is expected to include Goldman Sachs, Credit Suisse, JP Morgan, Nomura, BNP Paribas, Deutsche Bank, Morgan Stanley, Natixis and Societe Generale, the bankers said.

The financing will comprise around 2bn of first lien loans, roughly split between dollars and euros, which is expected to launch for syndication to institutional investors at the beginning of November, the bankers said.

The financing is likely to be well received by the leveraged loan market, which has been desperate for new paper following a swath of repricings, where borrowers have managed to lower their cost of credit.

Given the size of the deal, the first-lien will have to be sensibly priced to attract a wide audience but the demand for new paper and strength of the company should prevent the company from paying up, the bankers said.

Pricing on the deal could average around 425-450bp over Libor/Euribor, with a 0% floor at 99.5 OID, the bankers said.

In addition to the first lien, there will be around 500m of subordinated paper. The pre-placed preferred equity piece is expected to be similar to a shareholder loan, but provided by third party lenders.

Advent declined to comment.

Advent will combine Morpho with Oberthur Technologies, which it majority owns, to create a leading company in identification and security, based in France, with over 2.8bn in revenue. (Additional reporting by Hannah Brenton; Editing by Christopher Mangham)

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