Banks funding the $5.5 billion takeover of ServiceMaster by Clayton, Dubilier & Rice sells at a discount part of the loans needed to finance the transaction.
Underwriters for the lawn care and cleaning group’s loan package of about $2.8 5billion was sold $750m of the deal at a loss.
They will keep the remainder on their balance sheets for sale next year.
The loan is covenant-lite, which means that it lacks traditional investor protections - a common feature for loans funding this year's buy-out boom.
Citigroup, Bank of America, JPMorgan, Blue Ridge, Goldman Sachs and Bank of America are the underwriters for the takeover by the private equity group.
Credit squeeze
The financing for the leveraged buy-out of ServiceMaster was among the first to stall during the credit squeeze.
It was also forced to postpone a $1.15 billion high-yield bond offering because of unhinged market conditions.
However, the market for high-yield loans has experienced a slight recovery following the sale of $9.4 billion of loans to fund the buy-out of First Data by KKR, the private equity group.
Analysts say the First Data loan sale helped to revive the loan market, with three new deals for $4.5 billion added.
October 4 2007
Related Links
ServiceMaster
Clayton, Dubilier & Rice
Bookmark with:
- Digg
- Reddit
- Del.icio.us
- Facebook
- Newsvine
Sign Up to Exec UK now for FREE!