Ista International GmbH is selling bonds to support CVC Capital Partners’ 3.1 billion-euro ($4.1 billion) buyout of the German metering company.
The deal comprises 500 million euros of senior secured notes due 2020 and 525 million euros of senior subordinated securities due 2021, a person familiar with the situation said. Investor meetings will begin on May 6 to support the deal.
CVC agreed last month to buy a majority stake in Ista from Charterhouse Capital Partners LLP. The acquisition is also being financed with a 1.15 billion-euro seven-year term loan B portion and a 150 million-euro credit line, according to bond marketing materials.
Markus Pliessnig, a spokesman for Essen, Germany-based Ista, declined to comment on the deal.
The term loan B may pay an interest margin of 450 to 475 basis points, or 4.5 to 4.75 percentage points, more than benchmark rates, people familiar with the situation have said. A lender meeting is due to take place today to help sell the loan portion of the financing.
The senior secured bonds may be rated B+ by Standard & Poor’s, four levels below investment grade, and the senior bonds B-, the rating company said. Ista’s ratio of debt to earnings before interest, taxes, depreciation and amortization may be about 7.2 times at the end of 2013, according to the report.
Deutsche Bank AG is coordinating the transaction with Bank of America Corp., Goldman Sachs Group Inc., JPMorgan Chase & Co., Nomura Holdings Inc, UniCredit SpA also arranging the deal, according to data compiled by Bloomberg.
Ista provides electricity, water, heat and gas-meter reading services as well as hardware to property managers, home owners and utilities in 25 countries.