German carmaker Porsche is seeking to raise an additional €2.5 billion in the syndicated loan market after closing a difficult €10 billion refinancing, banking sources said on Tuesday.
The additional funds will be raised at an interest margin of 325 basis points after Porsche boosted the margin to fill a €1.45 billion shortfall on the €10 billion refinancing at the end of March, a banker close to the deal said.
The margin increase comes on top of an earlier 50 b.p. fee increase to 250 basis points and 200 b.p on the 10 billion refinancing which failed to generate sufficient interest.
Porsche was initially seeking to raise €12.5 billion - €10 billion to refinance an existing loan and a further €2.5 billion for general corporate purposes - but had to focus initially on the €10 billion refinancing after it met with a muted response from the market.
Porsche is now using an ‘accordion feature’ to increase the size of the €10 billion loan to the original €12.5 billion target, several bankers said.
Both the new 2.5 billion euro loan and the existing €10 billion deal include further pricing step ups to encourage Porsche to secure a credit rating and refinance the loan quickly in the bond market, the banker close to the deal said.
Porsche is expected to receive a credit rating at the end of May. Porsche was also forced to offer Volkswagen shares as security on the €10 billion refinancing. However this will fall away when the company is rated, the banker close to the deal said.
The company’s management is now holding one-to-one talks with lenders including Japanese banks, which were interested in contributing up to €1.5 billion in April after their financial year-end, two bankers said.
The €10 billion refinancing loan consists of a €6 billion one-year tranche which is expected to be refinanced quickly by bonds when the company is rated, the bankers said. The loan also includes a €4 billion one-year tranche that may be extended for a further year, they added.
The bond issue is expected to be led by the same banks that arranged the Í
€10 billion loan -- Barclays Capital, Commerzbank, LBBW, Deutsche Bank, UBS, Credit Suisse, Santander, BayernLB, BNP Paribas, Calyon, UniCredit/HVB, Helaba, Intesa, WestLB and DZ-Bank.
The bonds could be issued in a range of tranches, sizes and possibly currencies, the banker close to the deal said. (Reuters)