A bond issue that raised €170 million for Irish packaging company Clondalkin was heavily oversubscribed, according to one of the banks that managed the deal. Barry O'Halloran reports.
Clondalkin issued the high-yield bond following the acquisition of an 88 per cent stake in the company by private equity house Warburg Pincus for €630 million at the beginning of last month. The purchase was Warburg's largest to date in Europe.
Deutsche Bank, Barclays and Lehman Brothers led the issue yesterday. Deutsche subsequently reported that it was heavily oversubscribed.
The 10-year bond was priced to give a yield of 8 per cent, below the return of 8.125-8.375 per cent indicated on Thursday. Credit rating agency Standard & Poor's gave the bond a B- rating, while Moody's Investors' Service assigned it an equivalent B3 rating.
Warburg Pincus will fund the €460 million balance of the Clondalkin acquisition price with senior debt. The firm has also committed itself to redeeming its outstanding €125 million bond due for maturity in 2010.
The firm has said it will pay 111.625 per cent of face value to redeem the bonds. They were originally priced to deliver a yield of 10.625 per cent on maturity. A consortium of private investors, led by British private equity house Candover, sold Clondalkin to Warburg a month ago. The firm produces lids and seals for dairy product containers, as well as other packaging products. It has sales of around €700 million and operates in 40 countries.
Clondalkin is a former public company but its management took it private in 1999.
