Kraft Foods has obtained a $9 billion in bridge financing from a group of nine banks to back its $16.7 billion bid for Britain's Cadbury, bankers told Thomson Reuters.
The nine banks include lead underwriters Citigroup, Deutsche Bank, HSBC Holding and Barclays.
Kraft needs to show Britain's Takeover Panel that it has committed financing in place before November 9th, when it has to bid for a second time or walk away for six months, after Cadbury rejected its initial cash and share bid in September.
Analysts have said they expect Kraft to sweeten the terms of its bid, which is currently split between a 60 per cent equity component and a 40 per cent cash component.
But Kraft is likely to stick to its initial cash and stock proposal to Cadbury shareholders that was disclosed on September 7th, sources told Reuters this week.
Kraft launched its bid on September 7th at 300 pence cash and 0.2589 new Kraft shares per Cadbury share, valuing the British group at 745 pence as of Kraft's September 4th closing share price.
In early October, however, some market sources raised concerns over Kraft's ability to simultaneously raise acquisition financing and tackle the upcoming maturity on the $4.5 billion.
But other sources had pointed out that Kraft would not have much difficulty raising bridge financing or rolling over into a new facility since it enjoys strong relationships with several banks owing to its global ancillary businesses.
In an SEC filing on November 3rd, Kraft said it must maintain a net worth of $20 billion as per the agreement on its $4.5 billion revolver. As of December 31st, 2008, Kraft's net worth was $22.3 billion.
Reuters