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Avis to hold update call Tuesday regarding debt financing structure
By Sara Rosenberg
New York, Sept. 12 - Avis Budget Group Inc. has scheduled a call for Tuesday at 1 p.m. ET to discuss the modified deal structure, pricing and timing on its financing for the purchase of Avis Europe plc, according to a market source.
Morgan Stanley & Co., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Scotia Capital (USA) Inc. and RBS Securities Inc. are the lead banks on the deal.
The company launched in early August $900 million of incremental senior secured debt (BB), consisting of a $300 million revolver add-on talked at Libor plus 300 basis points, a $200 million term loan A talked at Libor plus 300 and a $400 million term loan B talked at Libor plus 350 bps with a 1.25% Libor floor and an original issue discount of 99.
The B loan had 101 soft call protection for one year.
But, after the deal was launched, the market saw a major sell-off, resulting in rumors that pricing on the facility would drift higher and that tranche sizes could change.
Details on the revised financing that Avis will launch on Tuesday are not yet available.
The company did disclose some information, however, as it filed an 8-K with the Securities and Exchange Commission on Monday that outlined the entrance into an agreement for a $20 million tranche A term loan and a $200 million revolver add-on for the acquisition.
Pricing on the tranche A term loan and revolver can range from Libor plus 275 bps to 325 bps based on ratings.
Under the agreement, Avis is buying Avis Europe for £3.15 in cash per share. The transaction is valued at £635 million, or about $1 billion.
Closing is expected to take place in October, subject to Avis Europe shareholder approval, court approval and regulatory clearances.
Parsippany, N.J.-based Avis Budget and Bracknell, England-based Avis Europe are vehicle rental companies.
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