EMEA Leveraged Loan: Applus' €800m term loan B
End of the saga The torturous ordeal of marshalling a take-private deal through Spain's markets reached a triumphant conclusion in July when Applus finally priced its €1.695bn buyout funding across bonds and loans.
The industrial testing company started serious talks around a sale in March 2023, with bidders whittled down in the following months to Apollo Global Management, which launched its bid in June, and Amber – a consortium controlled by I Squared and TDR Capital – in September.
The prolonged contest saw both sides increase their bids, with Amber also decreasing its offer acceptance threshold to 50% of Applus shareholders. Barclays upsized its underwrite to Amber to support the increased bid, and fully underwrote the new financing package.
"It took over a year to get the deal over the line, with lots of twists and turns," said Na Wei, global head of leveraged finance at Barclays. "With nine or even 12 months of market volatility, it makes it expensive on the underwrite."
The tug-of-war continued until final bids were delivered in April 2024. A month later, Amber's higher offer won, and Apollo withdrew.
A pre-marketing phase began, involving more than 30 accounts, and the trade hit the screens in June. Lead-left Barclays was global coordinator, and physical bookrunner with Morgan Stanley. Credit Agricole joined as a bookrunner on the loan.
But when it came to syndicating the deal, the story was complicated by the loan including €375m in incremental borrowing to fund Applus' IDIADA concession in Catalonia, which provides design, engineering and testing services for the development of cars.
IDIADA contributed 16% to the company's 2023 revenue, and investors had to do their credit work imagining both a successful bid for a long-term renewal of the concession, and an unsuccessful bid.
The company ultimately won its bid in September, but if it had lost, the incremental financing would have been cancelled.
Despite the extra credit work required and a rebalancing in the sizes to make the bond larger at the expense of the loan, pricing landed firmly in the issuer's favour.
The €800m loan due in 2029 came alongside a €895m five-year non-call two senior secured bond. The final terms were the inverse of what Applus had originally intended, having sought a €900m loan and a €795m bond.
The loan priced at 400bp over Euribor, with an OID of 99.75, having been guided to pay plus 425bp with a 0% floor and a 99–99.50 OID. The loan was repriced in November to 350bp.
The bond landed at 6.625% after initial price talk in the low 7s.
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