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On larger deals, certainly those above 500m [euro], the job of arranging mezzanine debt is now almost exclusively done by the one-stop-shop investment banks, which are able to underwrite bigger [...]

The one stop shop is a high-growth sector of the capital market. These operators can provide fast, simple solutions and reduce the number of conditional clauses in acquisition bids. The larger operators, including Goldman Sachs and CSFB, are proving particularly successful in the developing European market due to their US experience. Some analysts fear that the leverage finance market could see too much activity, and that operators could make expensive mistakes. Others believe that problems are a natural facet of a high-risk market and do not indicate overall ill-health.

Key trends of 2002 Dramatic fall in lending volumes--The European telecoms market, which had dominated syndicated lending in Europe for some time, ground to a halt in 2002. As a [...]

High yield, or junk, bonds are playing an increasingly significant part in the European leveraged buyout market. They have risks and limitations, but the fixed yield also offers advantages to both buyers and sellers. European operators generally have to place major junk bond issues on the US market in addition to the European market, and US investors are proving more willing to take up issues denominated in local European currencies, particularly the Deutschmark.

The 200m [pounds sterling] PizzaExpress LBO financing has been launched to joint lead arrangers, through mandated lead arranger Bank of Scotland. Banks are invited to sub-underwrite 50m [pounds sterling] with [...]

The concept of large recapitalisations (recaps) of leveraged borrowers is relatively new to the European buyout market, although common practice for the European mid-market and US market through the 1990s. [...]

The take-private of Jefferson Smurfit Group by Madison Dearborn in September 2002 was the largest leveraged buyout ever completed in the Irish market. At 2.5bn €, the senior debt facility [...]

How can a company facing a hostile takeover best respond using its debt position? Given that a target company tends to have attractive financial characteristics, such as low profitability, a [...]

The surge in leveraged buyouts has been fueled by the development of junk bonds, the strong stock market, and tax policies which reward companies for replacing equity with debt. These tax policies include allowing corporations to deduct a higher percentage of interest payments than lenders pay on the interest they receive, and the double taxation of equity income, such as dividends. Experts believe leverage buyouts do not pose a threat to the economy but the the government is over-subsidizing debt. A reform of the tax definition of debt would correct some abuses, raise government revenue, and improve the economy.

STRAPPED FOR EXPANSION CASH? Once upon a time, venture capitalists were venture capitalists, buyout specialists were buyout specialists, and never the twain would meet. That made life simple, if not [...]

The Ubiquitous Leveraged Buyout (LBO): Management Buyout or Management Sellout? My objective in this article is to discuss certain elements of the leveraged buyout (LBO), sometimes referred to as taking [...]

Punch Taverns used sophisticated financing techniques in its acquisition of Bass Pubs. The process began with a 564 million pounds sterling management buy-in in Dec 1997 by entrepreneurs Hugh Osmond and Roger Myers in their new company Punch Taverns. Bankers Trust BT Capital Partners Europe division arranged the debt package for this deal to include senior debt and a high yield bond bridge facility of 110 million pounds sterling. The particular circumstances of the deal facilitated pioneering two-stage involvement by Bankers Trust in securitization of the leveraged finance.

The European syndicated loan market continues to experience record levels of growth. Bank debts raised during the first four months of 1998 amounted to $39 billion, which was more than double the amount raised in the same period in 1997. Leveraged financing accounted for 26% of the debt and is assuming increasing importance. The strength of both supply and demand related to syndicated loans look set to continue. Trends in the sector include a move towards more investment in non-domestic buyout groups and increasing structure flexibility.

CVC was able to purchase electrical engineering specialists Haefely Trench from BBA Group due to a range of factors in its bid. The company demonstrated an understanding and a valuation of the risks and opportunities involved in the purchase, and it was able to offer an acceptable debt package, despite the complexities of the deal. CSFB was able to accommodate CVC's debt plans of including a US dollar high yield bond issue executed in Haefely Trench's nationally-organised profit centres. Unusual structural and financing aspects of the deal included a six-week completion limit.

State of the art financing methods were used in the leveraged buyout of several food divisions of retail food producer Danone, which cost 425 million pounds sterling in 1997. Paribas Affaires Industrielles (PAI) was the lead arranger of equity investment. PAI were given a long lead time for investment funding, enabling it to choose financing which best suited the deal. Four separate loan types were used in the financial structure, providing 66.7% of the total debt.

Acquisition financier Bankers Trust has a successful relationship with Investcorp, sustained by a mutual strategic approach to acquisition and leveraged finance. Investcorp's planned acquisition of road-side eating-place chain Welcome Break in 1996 was motivated by the acquisition's established position in its niche market and a detailed business plan was drawn up, with Bankers Trust arranging acquisition financing. Details of the transaction are presented.

The financing structure for Charterhouse Development Capital's 380 million pounds sterling leveraged buyout of Inchcape Testing Services (ITS) was revolutionary. The equity was divided between PIK preferred, preference and ordinary shares, while the debt financing was divided into three layers. The innovative use of financial engineering has challenged existing parameters. Private equity houses started to raise a higher level of funds during 1995-97 so that large transactions need to be led instead of shared. The distinction between MBIs and MBOs is becoming less clear.

The U.K.'s rail privatization program began in 1994 and some 50 separate businesses are to be sold off. There is a unique opportunity for venture capital companies to provide a potential 2 billion pounds sterling of acquisition debt. The government has separated train operations from the track and infrastructure, with newly-created Railtrack being at the centre of the new, privatised industry. The role of acquisition debt in passenger rail franchising is examined.

After a protracted stand-off between senior lenders and high-yield bond arrangers, The Royal Bank of Scotland and ING have finally launched a hybrid product to support the refinancing of Focus [...]

Procuritas Capital, the mid-market Scandinavian buyout specialist, has announced a final closing on its third vehicle, Procuritas Investors III, on 230m [euro]. Despite being the first buyout fund in the [...]

Syndication of the 164m [euro] leveraged financing backing Investors in Private Equity and SNCF Participations' 50.4% buyout of Ermewa Group is proceeding well and on schedule through mandated lead arranger [...]

GondolaExpress, the company created by TDR Capital and Capricorn Ventures International (CVI), has reached agreement with the management of PizzaExpress to make a 277.8m [pounds sterling] (US$435m) recommended cash offer [...]

Syndication of the 64.5m [pounds sterling] leveraged financing backing the 67.5m [pounds sterling] secondary buyout of Edinburgh Woollen Mill (EWM) is making slow but steady progress, through MLA Bank of [...]

Legrand was the deal that captured all the headlines in 2002. By completing the largest ever European buyout in a tough and erratic market, the equity consortium stretched perceptions of [...]