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Refinancing and rights issues start summer trend

As summer arrived, Thomas Cook,a Seven years out of the Eurobond market could meet self-imposed capital adequacy targets ■ leader of the European travel market, was ■ was regarded as long enough by German after £5.9bn of write-downs connected to its making sure its finances were in place for the electronics and technology company Siemens, exposures to the credit markets. holiday season. which stormed back on to the scene with a three- and Merrill Lynch acted as The company tapped the syndicated loan tranche e3.4bn fundraising. joint sponsors to the rights issue, and they along market for e1.8bn to refinance existing Very strong demand for paper from such a with UBS acted as bookrunners and underwriters, commitments, bolster the balance sheet after a European corporate powerhouse, which had not with RBS itself also co-bookrunning its own recent run of acquisitions, and to help fund the issued Eurobonds since June 2001, saw orders fund-raising. ongoing business and share buybacks. flood in to the tune of e9bn, allowing the The rump 299 million shares not taken up The credit facility replaces the group’s existing company’s advisers to tighten pricing at the were sold on by the underwriters for 230p, with facilities. It incorporates a three-year revolving shorter end of the bonds on offer. the difference being passed back to those credit and term facilities priced at 175 basis Deutsche and Goldman Sachs acted as shareholders not taking up their rights. points over Euribor/. bookrunners on the issues, with BNP Paribas and Of the e1.8bn, e200m replaces existing Royal Bank of as joint lead managers. The £4.9bn rights issue from Imperial bonding commitments that guarantee holiday On offer was e1.2bn of three-year December ■ Tobacco to refinance its £11bn makers’ deposits. Up to a further e320m is tied in 2011 bonds paying 5.25%, eventually priced to acquisition of Gauloises and Gitanes cigarettes with agreements relating to Thomas Cook’s tie-up go at 48 basis points over mid-swaps against group Altadis a year ago received 97.2% with Air Berlin. Other group acquisitions in recent original guidance of 50 points over. acceptances. months have included Hotels4u.com, Elegant A second tranche of e1bn, due in June 2014, The one for two rights issue saw RBS’s Hoare Resorts, the Thomas Cook India and Middle East was due to pay 5.375%, 70 basis points over. Govett unit acting as joint broker and underwriter business, Jet Tours and TriWest Travel Holdings. The final e1.2bn of 10-year Eurobonds due in with . Citi and Lehman Brothers Ludger Heuberg, Chief Financial Officer at June 2018 was on offer 85 basis points over and also acted as underwriters and financial advisers. Thomas Cook, said the remainder would be used paying a coupon of 5.625%. The issue discounted by 43% was got away at for general purposes as well as for the company’s Siemens treasury representatives confirmed 1,475p, with the rump shares being later sold at e375m share buyback programme, under which the bonds are being sold under a e5bn euro 2,000p. e100m shares at the time of the signing of the medium-term programme. loan had been cancelled. "We are planning for a more challenging “We are delighted to have secured this new Britain’s biggest ever rights issue, more ■ environment," said HBOS chief executive facility on satisfactory terms, reflecting our strong ■ than twice that of the previous record set Andy Hornby as he followed the summer trend financial position,” said Heuberg. by BT, was successfully got away, with Royal and launched a £4bn rights issue for the The facility is underwritten by Capital, receiving acceptances banking group. Bayern Landesbank, , HSBC, equivalent to 95.1% of its shares in issue. Morgan Stanley and Dresdner Kleinwort are LloydsTSB, Royal Bank of Scotland and . The 11 for 18 rights issue to raise £12bn was acting as joint financial advisers and brokers. Bayerische Hypo und Vereinsbank, BarCap, priced at 200p a share, a 46.3% discount to Coomerzbank, RBS and UniCredit acted as RBS's prevailing share price. Robert Lea is City Correspondent of bookrunners, with UniCredit as the co-ordinator. RBS said it needed the money to ensure it The Evening Standard.

BONDS YEARS TO ISSUER PARENT CURRENCY TRANCHE VALUE VALUE DEAL TYPE MARKET TYPE COUPON BOOKRUNNER MATURITY Corporate bond Euro market , Siemens AG euro e1,200m $5,253m 5.25% 3.5 investment-grade public issue Goldman Sachs THOMAS COOK MULTI-TRANCHE FINANCING

DEAL TRANCHE TRANCHE DEAL DEAL TRANCHE MATURITY LEAD CREDIT DATE BORROWER VALUE VALUE TYPE NATIONALITY MARGIN MARGIN (YEARS) ARRANGERS

Thomas Barclays Capital, Bayern Euribor Landesbank, Commerzbank 23/05/2008 e1,800m e500m Cook Term Loan A Germany 175bp 3 years 175bp Group, HSBC, LloydsTSB, RBS, Group plc UniCredit Group All data provided by Dealogic. www.dealogic.com

14 THE TREASURER JULY I AUGUST 2008