Rlpc rac launches $2 bln loan refinancing

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Oct 14 A 1.25 billion pound (1.99 billion US dollar) loan for Britain's second largest roadside recovery group RAC that will refinance existing debt and enable shareholders to take a dividend has launched for syndication, banking sources said on Tuesday. Barclays, BNP Paribas, Goldman Sachs and Nomura are providing the debt financing which follows Singaporean sovereign wealth fund GIC's acquisition of a stake in RAC from U.S. private equity firm Carlyle Group last month. GIC's acquisition halted RAC's plans for a listing. The dividend recapitalisation - a process whereby existing debt is refinanced and increased to enable shareholders to take a dividend payment - will be shown to investors at a bank meeting on October 16 in London, the banking sources said.

The covenant-lite financing includes a 965 million pound term loan B; a 50 million pound revolving credit facility (RCF); and a 235 million pound strategy investment loan structured as a second lien tranche. A portion of the second lien has already been preplaced with GIC, the banking sources said. Pricing will emerge on Thursday at the bank meeting. It is expected to be around 475 basis points (bp) over Libor on the TLB; 450bp over Libor on the RCF; and 725bp over Libor with a 1 percent Libor floor on the second lien, the banking sources added.

Debt to earnings are in the mid-5s through the senior and high-6s in total, the bankers added."Investors do like the deal but it is a lot of sterling to raise," an investor said.

Funds which do not have sterling will need to factor in around 70bp-80bp extra in costs to swap from sterling to euros, the bankers said. This is the third dividend taken by Carlyle since it acquired the company in 2011 from Aviva for 1 billion pounds, backed with 620 million pounds of debt. It took a 183 million pounds dividend in 2013 and 260 million pounds dividend in 2012, according to Thomson Reuters LPC data. RAC has about 8 million members and responded to around 2.5 million breakdowns in 2013. The business had core earnings of 156 million pounds last year. (1 US dollar = 0.6281 British pound)

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