Consortium cuts debt load in Abertis buy-source

* Debt financing cut to 5 bln eur from 8 bln – source

* Offer still values Abertis equity at 12 bln eur – FT

* Abertis shares up 3.1 pct

By Andres Gonzalez and Nigel Davies

MADRID, July 8 (BestGrowthStock) – The consortium preparing to buy
infrastructure operator Abertis (ABE.MC: ) will take on a third
less debt after some banks left its lending syndicate, a source
close to the situation said, reflecting tough credit conditions
in Spain.

Private equity firm CVC Capital Partners [CVC.UL] and
existing shareholders ACS (ACS.MC: ) and La Caixa’s investment arm
Criteria (CRI.MC: ) plan to put debt and equity into an investment
vehicle and launch a takeover of Abertis, which has a market
capitalisation of 10.75 billion euros ($13.5 billion).
[ID:nLDE664148]

Six out of an original 21 banks in a lending syndicate that
had been planning to provide 8 billion euros for the acquisition
have left the deal, scaling back the debt to close to 5 billion
euros, the source said on condition of anonymity.

Spanish infrastructure deals, like ACS’s sale of its Spanish
ports and the divestment of Endesa’s (ELE.MC: ) Spanish gas grid,
have run up against a reluctance among some banks to provide
credit approval during Spain’s financial downturn.

On Thursday, the Financial Times reported the consortium’s
bid would still value the equity of Abertis at 12 billion euros,
implying an offer for the toll road, airports and telecoms group
of at least 16 euros per share.

Spokespeople for ACS, Criteria and Abertis declined to
comment, while a CVC spokeswoman did not respond to a request
for comment.

Abertis shares rose on Thursday as investors were encouraged
by the suggestion the consortium was prepared to put up more
equity for their bid in light of the reduced debt. They were up
3.1 percent at 0942 GMT to 14.51 euros, after hitting a
six-month high. ACS shares were down 0.9 percent, in line with
Madrid’s blue-chip index (.IBEX: ).

A source familiar with the matter told Reuters on Tuesday
that Criteria, which owns 28.5 percent of Aberits, was targeting
a stake of over 28 percent after the buyout, while CVC’s stake
would be slightly less and ACS’s (ACS.MC: ) stake would be about
20 percent. ACS’s stake in Abertis is currently 25.8 percent.

FINANCIAL ENGINEERING

The consortium’s move to create and leverage on a new
holding company — at a challenging time for complex financial
deals in debt-hit Spain — would allow the partners to extract
much-needed cash while keeping control of the operating company.

Were ACS to sell Abertis shares to the acquisition vehicle
while taking a stake in the vehicle itself, it could raise the 2
billion euros it needs to realise its ambition of raising its 12
percent stake in Spanish utility Iberdrola (IBE.MC: ) to over 20
percent.

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For a calculator on how much cash the Spanish motorway
group’s core shareholders can extract while retaining control:

http://link.reuters.com/cuz26m

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For La Caixa, Spain’s third largest bank, the cash would
help it improve its capital ratios in the face of new capital
and liquidity requirements under Basel III.

At the same time as withdrawing cash, however, the
consortium will need to ensure Abertis’ credit rating is not
damaged, said UniCredit analyst Rocco Schilling.

“CVC, Abertis and Criteria should look to finance the deal
in a more conservative way, say 40 percent equity and 60 percent
debt, in order to keep the investment grade rating that Abertis
wants to keep after the deal is done,” he said.

Industry experts say the consortium will likely sell
Abertis’ non-core assets following the acquisition, with a 14.6
percent stake in Portugal’s Brisa (BRI.LS: ), a 6.7 percent stake
in Italy’s Atlantia (ATL.MI: ) and a 32 percent stake in France’s
Eutelsat (ETL.PA: ) the most likely candidates.

These stakes could fetch 3 billion euros, according to
market analysts, allowing the consortium to lower the company’s
gearing. Abertis has net debt of some 14.5 billion euros.
($1=.7939 Euro)
(Writing by Greg Roumeliotis; editing by Simon Jessop)

Consortium cuts debt load in Abertis buy-source