Bloomberg News

Clayton-led Group Said to Seek $1.9 Billion in LBO Debt for Spie

June 22, 2011

June 22 (Bloomberg) -- Clayton Dubilier & Rice LLC-led investors are seeking 1.34 billion euros ($1.9 billion) of leveraged loans that will help fund their buyout of French electrical engineering company Spie, according to a person with knowledge of the transaction.

The loans include six-year tranches paying interest of 375 basis points more than the euro interbank offered rate, and seven-year portions with interest margin of 425 basis points, said the person, who declined to be identified because the deal is private. A basis point is 0.01 percentage point.

The financing is the biggest loan for a leveraged buyout in Europe this year, according to data compiled by Bloomberg. Clayton Dubilier, along with Paris-based Axa Private Equity and Canadian pension-fund manager Caisse de Depot et Placement du Quebec, is in exclusive talks to acquire Spie from buyout firm PAI Partners, according to a joint statement on May 31.

Spie plans to raise 375 million euros of eight-year subordinated bonds as part of the LBO financing, said the person.

Coordinators of the financing HSBC Holdings Plc, Morgan Stanley and Societe Generale SA have been joined by Credit Agricole CIB, Deutsche Bank AG, BNP Paribas SA and Natixis as arrangers of the deal, the person said. The lenders have set a meeting tomorrow in London to invite other banks to the financing.

Leverage Levels

The acquisition debt represents about 5.5 times Spie’s earnings before interest, tax, depreciation and amortization, said the person. Equity investments from the Clayton-led investors will account for about 40 percent of Spie’s value, the person said.

Tom Franco, a New York-based spokesman for private-equity firm Clayton Dubilier and Stephanie Grace, a spokeswoman for Axa, didn’t immediately respond to a phone call and an e-mail seeking comment.

PAI Partners is selling Spie, based near Paris, after buying it for 980 million euros in 2006. Clayton Dubilier, based in New York, beat competition from a group formed by Carlyle Group and Bain Capital LLC and another formed by Goldman Sachs Group Inc.’s buyout unit and London firm CVC Capital Partners Ltd., people with knowledge of the matter said previously.

Spie employs 28,600 people in 31 countries, mostly in Europe. It generated 3.75 billion euros in sales and 192.3 million euros in operating profit in 2010.

In a leveraged buyout, a buyer funds part of its acquisition with money borrowed in the target company’s name. The debt funding the acquisition is typically graded below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s.

Details of the financing are as follows:

--Editors: Faris Khan, Michael Shanahan

To contact the reporter on this story: Patricia Kuo in London at pkuo2@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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