Schneider Electric SA has started syndicating a 2.56 billion-pound ($4.1 billion) loan backing its acquisition of Invensys Plc, according to two people with knowledge of the situation.
The one-year financing is being marketed to a limited number of banks during the next two weeks, said the people, who asked not to be identified because the financing is private. Bank of America Corp., BNP Paribas SA and Deutsche Bank AG are arranging the facility for Schneider, based in Rueil-Malmaison near Paris, according to data compiled by Bloomberg.
The world’s biggest maker of low- and medium-voltage power gear agreed to pay about 3.4 billion pounds to acquire Invensys on July 31. The London-based company makes software and control systems used by chemicals makers, oil refineries and mining companies.
The bridge financing, which can be extended by 364 days, will pay an initial interest margin of 30 basis points, or 0.3 percentage point, more than benchmark rates, a facility agreement on Schneider’s website shows. The rate will rise every three months to 1 percentage point after one year, and then to 1.25 percentage points after 18 months. The margin will increase further if the company’s ratings are cut.
Schneider Electric spokesman Veronique Roquet Montegon declined to comment on the financing. Bridge deals are a type of debt often replaced with bond offerings or longer-dated bank loans.