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Lpc european leveraged buyout loan pipeline hits _135bn


Oct 27 Bankers are lining up around 13.5bn of leveraged loans to back sponsors on several auction processes which, should they materialise, will provide great relief to a market desperate for event driven issue. Much of the pipeline could launch in the fourth quarter for companies including German building materials maker Xella, German bandage and plaster cast maker BSN Medical and German web hosting provider Host Europe. Banks are lining up around 1.5bn to back a sale of Xella, some 1.4bn of debt financing to back a sale of BSN and around 1bn for Host Europe. Bankers are eager to finance the transactions and get underwriting fees following a raft of best effort repricings and refinancings. Investors are also yearning for new deals, having been hit hard by a constant stream of adjustments to existing deals, which have squeezed pricing tighter and pushed for more aggressive terms. Of the 13.5bn of potential loan financings, around 5bn could be denominated in Polish zloty as bankers prepare up to 3.5bn-equivalent of debt financing to back a potential sale of SABMiller's central and eastern European assets.

The financing is set to follow another jumbo deal in the region as banks line up loans to back Cinven, Permira and Mid Europa's US$3.25bn acquisition of Polish e-commerce businesses Allegro and Ceneo. Goldman Sachs and Societe Generale are leading Allegro's deal, alongside other banks BNP Paribas, ING, Credit Agricole and UniCredit. Elsewhere, Ardian's acquisition of German residential and technical lighting products maker SLV is expected to be backed with around 360m of loans or 5.5 times SLV's expected 65m Ebitda. Banks are also preparing to raise 2bn-equivalent of senior loans to back Advent International's acquisition of French aerospace company Safran's biometrics and security business Morpho.

Other potential financings in the pipeline include around 540m for Belgian aluminium systems manufacturer Corialis, £300m for UK dentistry chain Oasis and 150m for fund and corporate services provider Alter Domus, and there are plenty of others. NEW PAPER While investors will be happy for the event-driven financings, some of the new deals such as BSN have an existing lender base, which won't provide as much opportunity as a debut issuer of new paper.

"There is a high demand for new deals as investors have a lot of cash in hand. The pipeline is building which should relieve the market a bit but what we really want to see is fresh paper," a loan banker said. It is hoped a supply of primary issuance will alleviate pressure on the secondary loan market, which is trading over par as cash-rich investors and warehousing CLOs continue to put money to work and drive up technicals. While banks are happily underwriting new deals to support sponsors in their buyout attempts, there will be a sense of urgency to get the deals out and done before year-end. It could be more difficult for some banks to continue piling into potential deals when there is a prospect of holding it over Christmas and launching into a less visible 2017 market."There is only around six weeks left to the market. When bidding for new business we are thinking to ourselves, is this something we can clear before the end of the year, and everyone at the moment feels very confident and there doesn't feel like any let up. In three to four weeks, adding underwriting risk for 2017 might see some of the banks disappearing," a senior loan banker said.

Lpc loans in retailer jack wolfskin plummet in secondary market


Nov 3 Loans in German outdoor brand Jack Wolfskin have plummeted on Europe's secondary loan market after lenders were told that next year's earnings are likely to be half of what was expected, banking sources said. The company held a call with lenders on Monday. Since then, its euro term loan B has fallen to 54.7% of face value on Thursday from 75.4% at the beginning of the week. The borrower's euro second-lien term loan was quoted at 17.5% of face value on Thursday, down from 67% on Monday, according to Thomson Reuters LPC data. The senior TLB has been quoted as low as the 40s, according to several loan traders. At these levels, lenders are likely to take severe losses, especially on the junior debt, sources said.

Private equity firm Blackstone agreed to buy Jack Wolfskin in 2011 from Quadriga Capital and Barclays Private Equity, backed with 485m of debt. The debt in the business now totals 365m, sources said.

At the call with investors -- to give an annual update -- it was revealed that earnings are likely to come in at around 30m, as opposed to around 60m expected. The company has been struggling with tough conditions in the retailer sector. It has also faced difficulties in China since it took direct control of the distribution of its products to around 700 Jack Wolfskin stores in the country in 2015, sources said.

With debt trading at deeply distressed levels, the company is expected to need a covenant waiver, the sources said. It could also look to restructure its loans and reduce them, in a bid to make its debt more manageable. Blackstone declined to comment.