(Bloomberg) -- A group of six banks have launched the first part of the highly-anticipated jumbo debt sale backing the acquisition of ThyssenKrupp AG’s elevator unit, Europe’s largest leveraged buyout in a decade.
The private equity firms that agreed to buy the division are seeking loans worth 3.05 billion euros ($3.4 billion) denominated in euros and U.S. dollars to part-finance the 17.2 billion euro buyout.
Lead underwriters for the transaction are Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., Royal Bank of Canada, and UBS Group AG. The issue comes after bankers pre-marketed the deal to a group of investors in the past few days to gauge interest.
Bankers are taking advantage of a swift rebound in debt markets to shift the debt that’s been weighing on their balance sheets since the first quarter. High-yield bonds and leveraged loans on both sides of the Atlantic have erased most of their losses since March and the markets have seen a flurry of offerings in recent weeks.
The new loan helps fund the acquisition of ThyssenKrupp’s elevator unit by Advent International Corp. and Cinven Ltd., together with RAG-Stiftung. The purchase is due to close by the end of July.
The debt package also includes senior secured bonds in dollars and euros, plus the equivalent of 1.7 billion euros in unsecured notes of which about 625 million euros has already been placed, Bloomberg has previously reported.
On its latest earnings call, ThyssenKrupp didn’t offer too many details about the elevator business, besides noting that the division saw a small annual net sales decline in the three months to end-March, attributed to the coronavirus impact in China.
In the loan market, the unit’s credit ratings will be watched closely by a large group of buyers, known as collateralized loan obligations. CLOs have been plagued by downgrades and may seek to add the business to their portfolios, depending on its rating.
A lender call on the offering is scheduled for Tuesday. Investors have until July 1 to commit to the deal.
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