Scandlines to Draw on Leveraged Loan Demand for Debt Refinancing

Scandlines GmbH, the Danish-German ferry operator owned by buyout firm 3i Group Plc, is seeking to take advantage of growing demand for leveraged loans to refinance debt.

Lenders are invited to a bank meeting in London on Oct. 8 for the 875 million-euro ($1.2 billion) financing, according to a statement from the banks underwriting the senior secured credit facility. It includes 525 million euros of a seven-year term loan B paying interest of 475 basis points more than the euro interbank offered rate and a six-year term loan and undrawn facilities with an interest margin of 425 basis points.

Buyout firms raised $94 billion of leveraged loans for the companies they own in Europe this year, compared with $30.9 billion in the same period of 2012, according to data compiled by Bloomberg. Concern that central banks will start raising interest rates has boosted demand for floating-rate corporate credit such as leveraged loans, driving margins on the debt down to 449 basis points more than benchmark rates from 474 basis points in the first half of the year, Bloomberg data show.

Scandlines’s refunding plan follows an attempted sale of the business in July that attracted lower-than-expected bids. People familiar with the matter said at the time the ferry operator’s owners may refinance the company should negotiations fail, and attempt another sale later in the year.

Financing Arrangers

Danske Bank A/S, Deutsche Bank AG, Goldman Sachs Group Inc., ING Groep NV, JPMorgan Chase & Co., Mizuho Financial Group Inc., Societe Generale SA and UBS AG are arrangers and underwriters on the financing, according to the statement. DC Advisory Partners is acting as financial adviser for Scandlines, Zinka Bozovic, a spokeswoman for DC Advisory who is employed by College Hill, said in an e-mail.

3i and Allianz Capital Partners GmbH, along with shipping company Deutsche Seereederei GmbH, bought Scandlines for 1.56 billion euros in 2007 from Deutsche Bahn AG and the Danish government.

The company, based in Copenhagen and Rostock, generated 212 million euros of earnings before interest, taxes, depreciation and amortization in 2012, Scandferries Group, the holding company of Scandlines reported. Scandlines had 807 million euros of bank loans at the end of 2012.

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