Wadias to raise debt for Danone buy
Wadia family is raising debt from ICICI Bank for buying out Danone stake through combination of corporate guarantees and pledging of direct and indirect promoter holdings in Britannia Ind, people close to situation said.
By Boby Kurian & George Smith Alexander, ET Bureau |
BANGALORE / MUMBAI: The Wadia family is raising debt from ICICI Bank for buying out Danone stake through a combination of corporate guarantees and pledging of direct and indirect promoter holdings in Britannia Industries, people close to the situation said.
ICICI Bank���s $200 million five- year facility comes with a ballooning interest regime ��� 425 bps for first two years and 675 bps for remaining three years. However, the Wadia group will explore ways of repaying the loan facility within two years, one source added.
The Wadia family is offering pledge the entire shareholding of the acquirer Leila Lands, a Mauritius-based entity, and another investment firm Naira Holdings, BVI.
It is believed that promoters have also gone for collateral pledging of their entire 50.96% stake in Britannia ��� routed through UK-based Associated Biscuits International Holdings ��� with an undertaking not to sell the stake without lender consent.
A Wadia group spokesperson declined to comment on financing details calling it speculative at this of time. Citibank is advising Danone on the transaction.
Sources said five Singapore-based investments vehicles of Wadias, which were used to mop up the shares of the late Rajan Pillai, have also given a non-disposal undertaking to the bank.
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The loan covenant also stipulates that the value of shares in the custody of the lender and the investments portfolio of Naira Holdings ��� estimated at $70 million ��� should not be less than 1.7 times the outstanding facility at any given point of time.And if the security created falls below the threshold value, the Wadia family will have the option to reduce the outstanding loan amount, or sell investments charged to the bank for prepaying the entire amount.
According to the loan schedule, Wadias will have to pay $40 million at the end of the first year, $20 million at the end of the second year and $140 million at end of the fifth year.
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