Financial site: Economic, Commerse & Business

Rlpc master blenders adjusts coffee merger loan

DE Master Blenders has increased the bank portion of a 7.6 billion euro-equivalent ($10.4 billion) loan being used to refinance debt and help fund a merger of its coffee business with that of Mondelez, banking sources said on Monday. The final terms of the loan emerged on Monday, and show the Dutch tea and coffee company has moved to tap cheaper financing, the sources said. The bank portion has been increased by 1 billion euros at the expense of the institutional fund piece, which will pay higher interest after pushback from institutional investors demanding better compensation, the sources added. Master Blenders was not immediately available to comment. Mondelez and Master Blenders announced in May that they would combine their coffee businesses into a new company called Jacobs Douwe Egberts (JDE). The deal, aimed at taking on market leader Nestle, will marry Mondelez's grocery coffee brands such as Carte Noire and Gevalia with Master Blenders' L'OR, Pilao and Senseo brands. As part of the deal, Mondelez will receive around $5 billion in cash, as well as a 49 percent equity stake in JDE.

A five-year pro-rata bank portion of Master Blenders' loan now includes a 3.9 billion euro term loan A, which was initially launched at 2.9 billion euros, and a 500 million euro revolving credit facility. Both pay 300 basis points (bps) in interest. The extra 1 billion euros will be in the form of a delayed draw term loan and will pay a commitment fee of 35 percent of the margin up to 180 days, 70 percent of the margin from 180-360 days and the full margin after 360 days, the sources said. The pro-rata piece, which is heavily oversubscribed and refinances a 3.3 billion euro leveraged loan that backed Joh A Benckiser's (JAB) 7.5 billion euro acquisition of Master Blenders in 2013, was increased as it is cheaper than the fund portion. The borrower is also partial to bank funding, preferring to leverage on established relationships and transparency of who holds the debt, the sources said.

PRICING A 4.2 billion euro-equivalent dual-currency term loan B (TLB), from institutional investors, has been reduced by 1 billion euros and now includes a 2.4 billion euro tranche and an 800 million euro, dollar-denominated tranche. The TLB was originally launched with a 3 billion euro tranche and a 1.2 billion euro, dollar denominated tranche, the sources said.

Pricing on the TLB increased to 350bp with a 98 original issue discount (OID) and a 75bp Euribor/Libor floor, which guarantees minimum returns for investors. Pricing was initially guided at 325bp with 98.5-99 OID and 75bp floor. Although European investors agreed to the deal at 325bp, U.S. investors wanted higher pricing, the sources said."The pro-rata portion was increased because it is cheaper for the borrower in terms of margin and the commitment fee is cheaper as well," one of the sources said. This is the second time the deal has been adjusted since launch after investors protested about delayed fee payments, prompting changes to the ticking fee offered on the TLB. Bank of America Merrill Lynch, JP Morgan and Morgan Stanley have arranged the deal and institutional lenders have until July 1 to recommit to the TLB, with allocations due on July 2. Banks have until the end of the week to recommit to the pro-rata portion, which is due to allocate next week.($1 = 0.7331 Euros)

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Rlpc vivarte in talks to reset loan covenants

Oct 4 French clothing retailer Vivarte is talking to lenders about potentially resetting its loan covenants to make its 2 billion euro($2.72 billion) debt pile easier to manage, banking sources said on Friday. Vivarte, which is owned by private equity firm Charterhouse, breached leverage and interest covenants on its leveraged loans in May. Vivarte said it had been hit by an unfavourable economic and consumer environment in France, made worse by weather conditions. [ID: nL6N0FN29N]The company has also breached August's covenant tests, investors said, but lenders are confident that a long-term solution can be found. Vivarte has around 600 million euros of cash on its balance sheet and does not require a full debt restructuring as it is able to meet debt repayments for the next three years.

"Vivarte is expected to have breached covenants again and we are prepared to enter talks with the company around this," one investor said. Vivarte declined to comment on the covenant reset. IN TALKS

Talks with banks and investors are expected to focus on amending loan documents to prevent further covenant breaches which will allow Vivarte to meet its debt targets in future. Sponsor Charterhouse could also opt to inject fresh equity into the business, banking sources said. Vivarte will also discuss its latest financial results and new business strategy with lenders.

The company is aiming to refurbish around 150 stores next year after a successful trial in 20 stores where turnover improved by more than 20-35 percent in the refurbished stores."I will present the very first promising commercial results of the new strategy ... I am sure that our financing partners will be convinced by all the work done during the last year, and will support Vivarte's ambitious organic growth plan," said Marc Lelandais, Vivarte's President. Charterhouse bought Vivarte in 2007 backed by leveraged loans totalling 3.43 billion euros which have held their value in the secondary market. Vivarte's term loans were trading at 85.5 percent of face value and 90 percent of face value on Friday, according to Thomson Reuters LPC data. ($1 = 0.7340 euros)