Doncasters Said to Seek $1.1 Billion to Refinance Buyout Loans

Doncasters Group Ltd., an engineering company owned by Dubai International Capital LLC, plans to raise about $1.1 billion of loans to refinance debt, according to two people with knowledge of the matter.

The company is seeking $515 million and 200 million pounds ($297 million) of seven-year first-lien loans, said the people, who asked not to be identified because the deal is private. It is also raising a $325 million second-lien loan of 7 1/2 years.

DIC completed the 700 million-pound acquisition of Burton-upon-Trent, England-based Doncasters in 2006. The company raised 881 million pounds of financing in 2007, according to data compiled by Bloomberg.

Doncasters is offering to pay interest at 425 basis points more than the London interbank offered rate for the first-lien loan in dollars, an interest margin of 475 basis points for the portion in pounds, while the second-lien debt will pay 825 basis points, the people said. A basis point is 0.01 percentage point.

The first-lien financing may be priced at 99 percent of face value while the second-lien debt is offered at 98 percent, the people said. Libor, a rate banks say they can borrow in dollars from each other, will have a 1.25 percent floor. The covenant-light debt doesn’t carry lender protection such as financial-maintenance requirements.

Lenders are invited to a bank meeting in New York tomorrow and on March 15 in London, the people said. The meetings are being arranged by Credit Suisse Group AG, Bank of America Corp. and JPMorgan Chase & Co.

A spokesman for Doncasters, who asked not to be identified citing company policy, declined to comment on the deal.

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