CPA Global Ltd., a patent services provider owned by Cinven Ltd., is taking advantage of U.S. demand for leveraged loans to refinance buyout debt it obtained last year.
The company plans to raise a $365 million, seven-year term loan B and a $300 million second-lien loan that matures in 7 1/2 years, according to two people with knowledge of the matter, who asked not to be identified because the deal is private. The loans will be covenant-light, said the people, which means they won’t include typical lender protections.
Edward Bridges, a spokesman for Cinven who works for FTI Consulting in London, declined to comment on the debt financing.
European companies owned by buyout firms raised a record $17.5 billion of dollar-denominated loans this year as they sought cheaper financing and more lenient borrowing conditions, according to data compiled by Bloomberg. The interest margin on U.S. dollar leveraged loans averaged 443 basis points more than benchmark lending rates this year compared with a spread of 473 basis points for deals in euros, Bloomberg data show.
Cinven raised 555 million pounds ($891 million) of leveraged loans in 2012 to back its buyout of CPA Global, according to Bloomberg data.
The Jersey, Channel Islands-based company’s refinancing, which also includes a 250 million-euro ($336 million) term loan B, will allow CPA to pay about 180 million pounds of dividends to its private-equity owners, said one of the people. The loans will increase CPA’s leverage to about six times from 3.9 times earnings before interest, tax, depreciation and amortization.
The deal, arranged by JPMorgan Chase & Co., Deutsche Bank AG and HSBC Holdings Plc, will be presented to lenders in the U.S. and in London on Nov. 6.