NEW YORK, Sept 7(Reuters) - Credit Suisse and Jefferies will provide US$1.028bn of loans to back the leveraged buyout of U.S. medical tubing and packaging company Tekni-Plex by private equity firm Genstar Capital from American Securities, two sources close to the matter said.
The financing will be split between a US$60m asset-based revolving credit facility, a US$708m first-priority term loan with a US$295m-equivalent carveout demoninated in euros, and a US$260m bridge loan that will ultimately be replaced with unsecured bonds, the sources said.
The debt package will lever the company at around 6.7 times.
Genstar is paying US$1.45bn, equivalent to 10 times Tekni-Plex’s US$145m of annual Ebitda, or earnings before interest, taxes, depreciation and amortization, they said. The total transaction cost is US$1.5bn, including US$50m of fees and expenses.
In addition to the new debt, the buyout will be capitalized with roughly US$530m of equity.
Reuters reported last week that Genstar was nearing a deal to acquire Tekni-Plex.
Credit Suisse will lead the revolver and term loans, while Jefferies will lead the bridge and eventual bonds.
Credit Suisse, Jefferies and a representative for Genstar declined to comment. Tekni-Plex did not respond to requests for comment.
The acquisition would come at a time when the pharmaceutical and healthcare sectors are forecast to be the fastest growing packaging end markets over the next five years, due partly to an aging population and government safety regulations.
American Securities acquired Pennsylvania-based Tekni-Plex from Oaktree Capital Management in December 2013 for an undisclosed sum. At the time, Reuters reported the deal was worth up to US$800m.
Packaging-related buyout transactions total US$5.7bn so far in 2017, having slowed to US$15.9bn last year from US$26.6bn in 2015, according to Thomson Reuters data. In May, U.S. buyout firm Leonard Green & Partners LP acquired Charter NEX, a manufacturer of specialty films for the food and healthcare industries, for US$1.5bn.
Reporting by Andrew Berlin; Editing By Michelle Sierra