Friday 26 December 2014
 
»
 
»
Story

Investcorp seeks $500m-plus refinancing

Manama, June 7, 2012

Investcorp, a Bahrain-based investment company, is seeking a loan of more than $500 million to help refinance debt due in 2013 as it looks to head off any potential refinancing risk next year, four sources familiar with matter said on Thursday.

The firm has done some high-profile deals in the past, including flotations of luxury brands Gucci and Tiffany & Co, but like other private equity houses in the region has been hit by unfavourable global market conditions. It reported a 90 percent drop in first-half profits in February.

But by securing a refinancing well ahead of time, Investcorp shows it is in a much stronger position than other investment houses in Bahrain which have faced refinancing issues.

In March, Bahrain-based Arcapita became the first Gulf entity to file for Chapter 11 bankruptcy protection in the United States after pressure from hedge funds ahead of a $1.1 billion loan maturity it was struggling to meet.

Investcorp has already raised the majority of the funds for the loan from banks in an earlier stage of financing, the sources said.  
The loan is split between three tranches, lasting 1.5 years, 2.5 years and 3.5 years, with banks joining the facility allocated across the three on a 15, 20 and 65 percent ratio respectively, the sources said.

It is structured as a forward-start agreement, where a loan is raised and signed by banks but the term does not begin and the cash drawn down until a later date - usually when the loan matures. Forward-starts are often used to circumvent volatile market conditions, by putting finance in place ahead of time in case bank funding dries up or pricing increases.

A spokesman for Investcorp in Bahrain declined to comment.
The sources spoke on condition of anonymity as the matter is not public.

The refinancing is being led by Barclays Plc, Citigroup Inc, Deutsche Bank and Royal Bank of Scotland.

Bank of America-Merrill Lynch, Commerzbank , ING and J.P. Morgan Chase have joined the loan and the transaction is now being syndicated to a small group of other banks, three of the sources said. The loan, which will commence in March 2013, carries a margin of 4.5 percent from the date of drawdown, one of the sources said.

Commitments from banks are accepted in dollars, euros and all Gulf Cooperation Council (GCC) currencies, with the final deal expected to be signed by the end of June.

The three-tranche facility will be used to replace existing obligations - a $500 million and $243 million loan due in March and April 2013 respectively and a bilateral facility also maturing next year.

The overall amount being refinanced is slightly more than $700 million as some of the debt has already been paid off by the company and Investcorp will pay any shortfall using internal cash, according to two of the sources.

Investcorp had around $420 million in cash on its balance sheet at the end of 2011, a February 22 note from Fitch Ratings said.  - Reuters




Tags: Bahrain | Investcorp | refinance |

More Finance & Capital Market Stories

calendarCalendar of Events

Ads