London, Oct 31 - Spanish food group SOS Cuetara said on Thursday it is in the market with a 994 million euro ($1.30 billion) syndicated loan that refinances a bridge loan backing its acquisition of oil and vinegar firm Bertolli from Unilever this summer.
The loan, which has been launched for sell-down amid difficult debt market conditions, will also be used to refinance the group's existing debt.
The loan is driven by agent Ahorro Corporacion Financiera (ACF) and a handful of banks, including Royal Bank of Scotland, Intesa, Banco Popular and Rabobank, have come in to the transaction with take-and-hold commitments, banking sources close to the deal told Reuters LPC.
A bank meeting was held yesterday in Madrid, where the deal was shown with improved margins, bankers said.
The loan is split into a 300 million euro bridge to equity tranche with a one-year maturity, which pays an initial margin of 175 basis points (bps) over EURIBOR; and a 200 million euros, three-year bullet term loan pays 250 bps, one banker said. There is also a 344 million, five-year amortising tranche paying 300 bps over EURIBOR, and a 150 million, three-year revolver paying 250 bps, the banker added.
Margins on the loan are linked to a leverage grid, one banker said.
Initial leverage is high at around six times, three bankers said, but the firm is expected to deleverage rapidly afterwards.
SOS Cuetara says refinancing of part of the loan, through a combination of combination of asset disposals and or equity issuance, will be prompt.
"We are going to pay back at least half of the loan in the first five to six months, so almost immediately," SOS Cuetara chairman Jesus Salazar told Reuters LPC.
Caja Madrid has agreed to buy 16.1 million new shares from SOS Cuetara at 9.25 euros per share, equivalent to a 10.5 percent stake in the group, subject to the acquisition going through. SOS said it will use the proceeds to repay debt.
ACF and Royal Bank of Scotland have underwritten further planned equity issuance for at least 250 million euros, one banker said.
The group has also been actively seeking to divest other assets, and hired Ahorro Corporacion in September to lead the sale of a 25 percent stake in its Italian olive oil business Carapelli. In October, SOS Cuetara said it was receiving non-binding offers for its Cuetara biscuits unit.
The operation has a strong domestic flavour although Royal Bank of Scotland is helping liaise with international banks on an informal basis, two bankers said.
Mandated lead arrangers are invited to commit 120 million euros with views to hold 75 million, for fees of 85 bps for commitments on the 300 million, one-year tranche and 160 bps for the other tranches, one banker said.
Smaller tickets are available as the agent is looking to be flexible in the market, one of the bankers said.
The first two tranches and part of the third tranche are earmarked to finance the acquisition, while the remainder of the loan will be used to refinance company debt, one banker said.
A banker said the deal is expected to wrap towards the end of November, when the part of the loan backing the acquisition is expected to fund, but noted timelines are flexible.