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Oberthur refinances debt to tap hot market conditions

By Claire Ruckin

LONDON (Reuters) - French smartcard maker Oberthur Technologies is set to refinance its 770 million euro-equivalent ($1.04 billion) of leveraged loans that backed its 2011 buyout by Advent International to take advantage of good market conditions and create a more attractive covenant-lite cross-border debt package, according to banking sources on Tuesday.

When Oberthur's buyout financing launched in 2011 it struggled and was among a number of deals unable to syndicate due to market volatility caused by the eurozone crisis. It relaunched in 2012 with the inclusion of a second lien facility and the loans finally allocated in March 2012 heavily discounted with a 95 OID.

Advent is now looking to refinance the debt on more favorable terms that will remove covenants, increase its dollar loan portion, remove its TLA and second lien facilities and include a high yield bond.

Advent declined to comment.

"The sponsor is being opportunistic and market conditions are favorable to do so," a European leveraged finance banker said.

JP Morgan, Goldman Sachs and Lloyds are joint global coordinators and bookrunners on the deal alongside Barclays, HSBC and Societe Generale as joint lead arrangers and bookrunners.

A bank meeting is due to take place in London on Wednesday and in New York on Thursday to showcase the deal. Expected corporate family ratings are B2/B-.

The refinancing will include a 440 million euro-equivalent TLB split roughly between 165 million euros and 275 million euros denominated in dollars. Pricing is likely to come in much tighter on the refinancing compared to the 500 bps margin on Oberthur's existing 410 million euro-equivalent TLB, that has a $250 million carve out.

Oberthur's 100 million euro second lien and 100 million euro TLA are expected to be refinanced with an approximate 200 million euro-denominated unsecured high-yield bond.

Senior leveraged is expected to reduce to around 3 times from a current level of 3.6 times while total leverage is likely to remain the same at around the 4.4 times mark.

Based in Levallois-Perret, Oberthur says it is the world's second largest provider of security and identification solutions and services based on smart card technologies for mobile, payment, transport, digital TV and convergence markets.

(Editing by Christopher Mangham)

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