Sainsbury’s secures £ 3.5bn loan to purchase Asda

LONDON (LPC) – UK supermarket Sainsbury’s has granted £ 3.5bn in syndicated loans to support its proposed £ 7.3bn acquisition of Asda from Walmart, the company said on Wednesday.

FILE PHOTO: Workers unload a Sainsbury’s home delivery van in central London, Britain April 30, 2018. REUTERS / Toby Melville / File Photo

The company will also increase its existing revolving credit facilities to £ 2bn from £ 1.45bn to provide the combined companies with financial flexibility.

Funding for the acquisition includes a two-year £ 2 billion term loan and a three-year £ 1.5 billion term loan.

The revolving credit increase includes a three-year £ 445 million facility, a four-year £ 590 million facility, a five-year £ 665 million facility and a five-year £ 300 million facility. .

Acquisition financing was oversubscribed to new and existing lenders and their commitments were reduced on all tranches.

The main arrangers and bookkeepers mandated on the acquisition loans were ABN AMRO, Banco Santander, Bank of China, BNP Paribas, Rabobank, Crédit Agricole CIB, Deutsche Bank, HSBC, Lloyds Bank, MUFG, Morgan Stanley, NatWest, SMBC and UBS.

The main mandated arrangers were Banca IMI, Banco de Sabadell, ICBC, Mizuho, ​​Raiffeisen Bank International and Standard Chartered Bank. Svenska Handelsbanken also participated.

HSBC is also a financing facility agent.

The revolving credits were initially organized in October 2017 via a club syndicate of Banco Santander, Barclays Bank, BNP Paribas, Deutsche Bank, HSBC (facility agent), Lloyds Bank, MUFG, Morgan Stanley, Rabobank (coordinator), Royal Bank of Scotland, Svenska Handelsbanken and UBS.

Under the terms of the merger, U.S.-based Walmart will sell Asda to Sainsbury’s in exchange for a 42% stake in the combined company and £ 2.875 billion in cash, valuing Asda at around £ 7.3 billion.

The merged company will bring together UK brands Sainsbury’s, Asda and Argos and overtake Tesco as the UK’s largest supermarket chain.

The new company is expected to have a quality credit profile on completion, which is expected in the second half of 2019, and be highly cash-generating, which will allow it to deleverage quickly.

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