By Claire Ruckin
LONDON, Aug 2 (Reuters) - Banks have decided to wait until September to syndicate a jumbo US$7.75bn-equivalent buyout financing backing US life sciences company Avantor's take-private of lab supplies company VWR Corp VWR.O, banking sources said on Wednesday.
Underwriting banks Goldman Sachs (NYSE:GS), Barclays (LON:BARC) and Jefferies were considering launching the financing before the summer holiday period to reduce their exposure and avoid holding the large deal on their balance sheets over the slower holiday period.
The banks gave a select group of investors a nine-page headline number presentation at the end of July but assembling an Offer Memorandum in the short timeframe proved challenging, the sources said. banks decided not to go ahead with syndication at that time in favour of holding the risk over the summer and syndicating the deal in September, the sources said.
"This was the last week a deal could be launched prior to summer," a banker said.
VWR's buyout financing has been eagerly awaited by loan investors, who are keen to make large commitments to new buyouts.
However the deal will be competing with other large buyout loans in September, including a 2bn-equivalent loan financing backing Netherlands-based drinks bottler Refresco's RFRG.AS acquisition of the bottling activities of Canada-based Cott Corp BCB.TO and a 3bn buyout financing for German generic drugmaker Stada STAGn.DE .
Avantor and VWR were not immediately available to comment.
US LAUNCHES
Several other large US buyout loans have launched this week as banks try to derisk before the summer slowdown, including a US$1.69bn loan backing KKR's buyout of listed healthcare website WebMD WBMD.O and a US$2.25bn loan which finances KKR's acquisition of vitamin supplement maker Nature's Bounty.
Banks prefer to sell deals quickly to reduce market risk and are wary of holding deals on balance sheet. Market conditions can change quickly, which can make deals hard to sell.
The large size of VWR's loan means that the deal will require investors' full attention to maximise liquidity. This will be best achieved in September, when market players return from their break, sources said.
"Having to work through a huge cross-border deal for VWR in August is not tempting at all. It's a good deal but it is right the banks are holding off, it definitely feels like one for September," an investor said.
The US$7.75bn-equivalent financing comprises a US$5bn senior secured first-lien term loan that will include a 1bn tranche; a US$2.25bn senior unsecured bridge facility and a US$500m revolving credit facility. There is also preferred equity totalling US$2bn of senior debt and US$650m of junior debt.
Some pieces of the unsecured bridge facility and preferred equity tranches have already been syndicated in the US to reduce banks' risk.
Avantor, which is owned by New Mountain Capital, said that it would buy VWR Corp for about US$4.38bn on May 5.
The merger will create a global laboratory equipment giant supplying healthcare and technology industries with everything from beakers to microscopes.
The deal combines Avantor's strength in manufacturing and its presence in emerging markets with VWR's distribution network in the Americas and Europe, the companies said previously.
Avantor, which was formed in August 2010 when New Mountain Capital purchased the business from Covidien Inc, manufactures materials and chemicals for the biopharma industry.
VWR, a company that traces its roots to the California Gold Rush in the 1850s, was bought by Madison Dearborn Partners in 2007 and went public in October 2014.