RBC Said to Postpone $222 Million U.S. Portion of Exact LBO Loan

Royal Bank of Canada postponed marketing a $222 million loan backing the purchase of Dutch software company Exact Holding NV after sweetening terms to attract investors to other parts of the buyout financing, according to a person with knowledge of the deal.

The bank last week was still trying to sell the debt after a 100 million euro ($113.3 million) first-lien loan and $125 million second-lien loan were syndicated, according to data compiled by Bloomberg.

Apax Partners agreed last year to purchase Exact for 730 million euros. Moody’s Investors Service estimated in a report last month that the buyout will leave Exact with a debt level of 6.2 times a measure of earnings. Lending guidance issued in 2013 by the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. says that leverage of more than 6 times raises concern.

To lure investors on the European loan, the discount was increased, with the first-lien debt sold at 94 cents on the euro, compared with an original offer of 99 cents, Bloomberg data show. The $125 million second-lien portion, led by Deutsche Bank AG, was sold for 89.5 cents on the dollar.

Such discounts reduce proceeds while boosting returns for investor. When they are large enough, they can eat into banks’ underwriting fees. Before the U.S. first-lien debt was postponed, it was being offered at 96 cents, said the person with knowledge of the deal, who asked not to be identified because the information isn’t public.

Kait Conetta, a spokeswoman for RBC, didn’t immediately return a phone call seeking comment. Todd Fogarty, a spokesman for Apax who works at Kekst & Co., declined to comment.

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