84.9bn 199 - Revision, Redovisning, Affärsrådgivning, Skatt Finance Update_… · Leveraged...

Leveraged Finance UpdateDevelopments in the European leveraged finance markets

November 2017

Strictly private

and confidential

€84.9bn3Q17 leveraged loanvolume

1993Q17 number of leveraged loan transactions

38.7%Share of refinancing relatedloans in total volume

2017

Q3

PwC3

Investors remain asset-hungry and allow for increasingly borrower-friendly terms

4

Leveraged Loans 5

Recent Deal Activity 24

Leveraged loan volumes and deal count

Size, structure and equity contribution

Pricing and rating developments

Financial ratios and covenants

Unitranche

6

7

8

10

11

Selected case study - Kloeckner Pentaplast

Selected leveraged deals 2Q17

25

PwC Debt & Capital Advisory

28

Independent specialists

Advice throughout investment lifecycle

Contact us

29

30

31

High Yield Bonds 13High Yield Bond volumes and tenor 14

Interest Rates 16

Base and swap rates

CDS for financials and corporates

17

18

Topical: it’s a borrowers market

20

We see financing terms and conditions getting more and more borrower-friendly in terms or (real) leverage levels…

…but also in terms of relative pricing and covenant (lite) setting

21

22

26

PwC

Investors remain asset-hungry and allow for increasingly borrower-friendly terms

4

20

40

60

80100

120

140

160

180Q32017

159

PwC Leveraged Finance Barometer

The PwC Leveraged Finance Barometer is a relative index based on key leveraged finance parameters that together form a proxy for the current state of the European leveraged finance market. We use rolling LTM development in parameters such as volume and number of deals, pricing, leverage, covenant package and equity contribution to establish a quick view on the market

Dear reader,

With even one quarter still to go, this year already smashed loan and bond issuance levels of the full year of 2016. We see significant deal activity on all fronts, from refinancings and (dividend) recaps to M&A transactions.

Deal activity is fuelled by an abundance of liquidity available, with an increasing amount of non-CLO funds pouring into the European debt markets. In addition, positive economic sentiment in Europe seems to spill-over to private equity investors spending their dry powder on relatively high-multiple acquisitions and to corporates showing more aggressive (buy & build) M&A strategies.

Although concerns are uttered that the markets might be (getting) overheated, we continue to see lenders competing for the available deals in the market, which is further enhancing the borrower friendly environment. In line with significant supply of liquidity we for example continue to see an increase in senior leverage levels, which might be even more substantial if you correct for the adjustments that are increasingly allowed in financial definitions. Furthermore, pricing for this additional leverage has decreased significantly over time.

In this editions’ topical we focus on the overall increase in borrower friendly financing terms and conditions, which are reflected in leverage and pricing numbers, but also in covenant setting and flexibility covered in documentation.

Best regards,

Debt & Capital Advisory

Institutional spread per senior leverage (bps)

121

70

100 10794

125137 132 134

159

020406080

100120140160180200

2008 2009 2010 2011 2012 2013 2014 2015 2016

84.2

0

20

40

60

80

100

120

140

160

180

200

Jul-09 Nov-10 Apr-12 Aug-13 Dec-14 May-16 Sep-17

Inst. spread per senior leverage

PwC

19 April 2016Strictly private and confidential

Draft

Leveraged Loans

PwC6

Senior loan volume and deal count

Purchasing price multiples

Overview of the average LBO Purchase Price as a Multiple of Pro Forma Trailing EBITDA

Source: S&P Capital IQ LCD

Quarterly amount of senior leveraged loans issued within Europe and deal count

€bn #

Purpose diversification 3Q17

Overview of the purpose of the leveraged loan transactions, based on deal count

Overview of sources of funding as a Multiple of EBITDA

With €27bn of volume in 3Q17, total leveraged loan volume in 2017 marked €84.9bn, indicating a potential post-crisis record year for 2017, both in terms of volume and deal count. 2017 is already up to 199 deals, which is almost twice the amount of deals as compared to the same period in 2016.

Refinancings - mostly consisting of repricings -were the dominant type of leveraged loan transactions over 3Q17. Refinancing activity over the whole of 2017 marks a volume of €35.1bn, which is a post-crisis high. Acquisition related financing however is the main purpose for leveraged financing transactions over 2017 to date, whereby its share increased from 39.1% in previous quarter to 44.20% in this quarter.

Since 2016 the LTM purchase price multiples for buyouts climbed from 9.9x to 10.5x as of October 2017, reflecting the ongoing hunger of investors, amongst others fuelled by availability of cheap liquidity in combination with positive economic sentiment.

Leveraged loan volumes and deal count

8.9x9.2x

8.8x9.3x

8.7x

9.7x9.2x

9.9x10.5x

3.0x

5.0x

7.0x

9.0x

11.0x

2009 2010 2011 2012 2013 2014 2015 2016 3Q17Purchase Price Fees/Expenses

8.9x9.2x

8.8x9.3x

8.7x

9.7x9.2x

9.9x10.5x

3.0x

6.0x

9.0x

12.0x

2009 2010 2011 2012 2013 2014 2015 2016 3Q17

Debt/EBITDA Other/EBITDA Equity/EBITDA

44.20%

15.60%

38.70%

1.50%

Acquisition Related

Recapitalisation

Refinancing

Other

199

-

25

50

75

100

125

150

175

200

225

€0

€10

€20

€30

€40

€50

€60

€70

€80

€90

2011 2012 2013 2014 2015 2016 2017

1Q 2Q 3Q

4Q Deal Count

PwC

Size, structure & equity contribution

7

Borrowers’ sources of funding Distribution of senior deal size

Equity contribution

Sources of funding used by European borrowers in the leveraged finance markets

Overview of the average senior deal size and the relative dispersion of the underlying deals

Comparison of relative equity contribution for sponsored LBOs and all LBOs in Europe. Note: information on equity contribution is not available for all LBOs and therefore based on lower amount of observations


€m

The sources of funding reveal the increasing majority of all-senior financing solutions ever since 2014, with a share of 70.6% in 3Q17.

There remains an imbalance in supply as compared to demand in Europe, which further drives the competitive lending environment amongst banks and non-bank lenders to acquire a piece of the pie resulting in higher leveraged all-senior structures.

The average senior deal size increased slightly by €17m to €449m in 3Q17 as compared to 1H17, while equity contributions are slightly down at c 45%. This decrease in equity contributions, with purchase price multiples north of 10x, mark the willingness of lenders to put in significant leverage in a deal.

€0

€100

€200

€300

€400

€500

€600

€700

20082009 2010 2011 2012 2013 2014 2015 2016 1Q17 1H17 3Q17

Average 3rd Quartile 1st Quartile Median

0%

20%

40%

60%

80%

100%

Sr Only Sr + 2nd Lien

Sr + Mezz Sr + 2nd Lien + MezzSr + HY Bond Bond OnlyOther

45.7%

44.8%

30%

40%

50%

60%

2010 2011 2012 2013 2014 2015 2016 3Q17

All LBOs Sponsored Only LBOs

PwC


8

Average TLB spread and YTM Average all-in TLB spread development Average TLB margins by deal size

Average spread and average yield to maturity on TLB loans. YTM takes into account the OID at issuance

Overview of the average all in TLB spreads over time for B-rated European leveraged loans

Overview of average TLB spreads in basis points on loans smaller than €350m and loans larger than €501m


In 2Q17 the average TLB spread increased for the first time since May 2016. This trend continued over the third quarter. The spread ended up at, a still very competitive mark of, E+385 in September 2017.

The slight increase in margins as of 2Q17 can be explained by so-called ‘new-money supply’ as more M&A deals have come to the market, both buyouts as well as buy and build related transactions. This has reduced the supply shortage in Europe from the perspective of lenders and therefore somewhat mitigated the price pressure on debt.

In accordance with TLB spreads, the development of average yields to maturity for TLB financings have also switched signs end of 2Q17 climbing to 417bps by the end of 3Q17.

The average all-in TLB spread increased by 15bps to E+433. Main drivers are a small increase in overall margins, but also slightly higher OIDs.

With respect to deal size, there remains a c.50bps delta between deals lower than €350m vis-à-vis deals higher than €500m.

439 457 500 463 419 396 368 373 389

24 53

76

23

13 9

4 5 15

42

74

48

68

63 66

54 40 29

506

583 624

554

495 470

427 418 433

-

100

200

300

400

500

600

700

3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17

Spread OID over 3 years EURIBOR floor benefit All in spread

405

351

-

E+100

E+200

E+300

E+400

E+500

E+600

€350m or Less €501m+

4.2%

E+300

E+350

E+400

E+450

E+500

E+550

Avg TLB Spread Avg Yield to Maturity for TLB

PwC9



Rating diversification trend

Overview historical development of applicable ratings underlying the leveraged loan transactions based on deal count

Preview of the historical development of the commitment fee in Europe and the United States

Overview of the historical development in flex activities

As compared to 2Q17 (124bps), the average commitment fee in Europe has increased slightly to 134bps in 3Q17. This can also be explained by the new-money issuance as set out on the previous page.

Besides other indicators, also flex activity proves the still significant supply of liquidity flooding European financial markets. In 3Q17 93 observed transactions were flexed down, which reflects 26% more than all downward flexes observed throughout the whole year of 2016 (74).

All observed deals in 3Q17 were rated as non-investment grade, where the majority of rated deals are classified as single B paper.

New-issues: Flex activity

Average commitment fee: Europe vs. US

0

20

40

60

80

100

120

140

160

180

200

2008 2009 2010 2011 2012 2013 2014 2015 2016 LTM3Q17US Europe

-

10

20

30

40

50

60

70

80

90

100

2011 2012 2013 2014 2015 2016 LTM 3Q17

Flexed Up Flexed Down

0%

25%

50%

75%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD3Q17

BBB/BBB- BB+/BB/BB- Split BB/B B+/B/B- CCC/CCC+ NR

PwC

Financial ratios & covenants

10

Pro forma Net Debt/EBITDA ratios Average number of covenants

Distribution of Deals by Net Debt/EBITDA Levels

Pro-forma net debt/EBITDA ratios of European leveraged loan borrowers

Average number of covenants included in European leveraged loan documentation

Overview of average initial covenant levels of European leveraged loan borrowers


After hitting the record in 1Q17 since 2007, first lien debt to EBITDA multiples have remain relatively stable over 2017 at 4.8x. While first lien debt multiples have increased significantly since 2015, second lien and other debt multiples have narrowed with the result of a total leverage hovering around the level of 5.0x for three years now.

As compared to 2016, we see only slight changes in the distribution of deals by leverage multiples. There was an increase in the buckets for the highest leverage (>6.0.0x) as well as the second highest leverage levels (5.0x to 5.9x).

An average number of 1.3 covenants per transaction proves the growing dominance of cov-lite deals in Europe, whereas investors no longer require pricing premium for less covenants.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 1H17 3Q17

Less than 3.0x 3.0x to 3.9x 4.0x to 4.9x 5.0x to 5.9x 6.0x or Higher

3.5 3.7 3.6 3.7 3.7 3.6

3.0

2.5

1.4 1.3 1.3

0.0x

1.0x

2.0x

3.0x

4.0x

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 3Q17

3.9

3.33.5

3.93.6

3.94.3 4.3

4.64.8

1.1

0.70.9

0.6 0.90.6

0.4 0.4 0.20.1

5.2x

4.0x 4.4x 4.5x 4.6x 4.7x

5.1x 5.0x 5.0x 5.1x

-

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

2008 2009 2010 2011 2012 2013 2014 2015 2016 3Q17

First Lien/EBITDA Second Lien/EBITDA Other Debt/EBITDA

PwC

940

2,075

2,293

3,107

2,630

-

15

30

45

60

75

0

750

1,500

2,250

3,000

3,750

2013 2014 2015 2016 3Q17

Volume Deal count

Unitranche financings continue their course to be established as a mature substitute source of funding

Overview of the volume and deal count for Unitranche transactions for the period 2013-3Q17


Unitranche deal count and volume

€ mln #

42

Date Company Country Sector Sponsor Funding

Amount (m)Unitranche

lenders

22/09Electronic Equipment

109.1

05/09Number of dental

clinics

Specialized Finance

83.5

10/08Entertainment &

Leisure120.0

07/08Financial Services

249.1

18/07 Automotive 175.0

13/07 Restaurants 18.0

Selected Unitranche deals in 3Q17

11

We observed 25 Unitranche transactions in the third quarter of 2017 with a disclosed deal volume of some €1,2bn. Compared to previous quarters, most transactions completed on the mainland of Europe and not in the United Kingdom. France, the Netherlands and Spain were the largest beneficiaries in terms of geographical allocation.

The largest disclosed Unitranche that we have seen in 3Q17 concerned the €249.1m financing by Alcentra to Non-Standard Finance in the United Kingdom.

PwC


Draft

High Yield Bonds

PwC

High Yield Bond volumes and conditions

14

European HYB volume Purpose diversification 2Q17

Use of proceeds with respect to European high yield bonds issued in 1Q17, based on count

Overview of European high yield bond issuance taking into account the bond credit quality and collateral


High yield bond markets kept their strong momentum of the first quarter reaching a total deal volume of €65.0bn in 3Q17, representing an increase of 22% of the total volume over 2016 (€53bn). Investors show increasing risk appetite, when looking at the increase in the share of unsecured bonds from 53.5% in 2016 to 55.9% per 3Q17.

In accordance with the leveraged loan market, the main purpose of bond issuance was refinancing as borrowers want to make use of the current low interest rate environment and cut their overall cost of funding.

Bond yields for B rated instruments continue to decrease and ended up at a record low yield of 5.34%. BB rated instruments increased slightly towards 3.42%, which is also one of the lowest marks measured.

Average primary yields

Average primary yields of B and BB rated European high yield bonds

Non-call provisions

Split of the most common non-call provisions as percentage of the total volume of European high yield bond issues

19.67%

33.95%17.59%

9.12%

19.67%

Refinancing - Other(e.g. bond-to-bond)

General purpose

Refinancing - BankDebt

Recap

M&A

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012 2013 2014 2015 2016 3Q17

1 yr or less 1.5 to 2 yrs 2.5 to 3 yrs Longer than 3 yrs Life N/A

-

€10B

€20B

€30B

€40B

€50B

€60B

€70B

€80B

2008 2009 2010 2011 2012 2013 2014 2015 2016 3Q17

Secured Unsecured Subordinated

5.34%

3.42%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

B BB

PwC


Draft

Interest Rates

PwC

Base and swap rates

Euribor development

Swap rate development

Source: Bloomberg

Euribor rates (1M, 3M and 6M) since 2007 until 3Q 2017

Swap rates (1Y, 3Y and 5Y) since 2007 until 3Q 2017

(0.07%)

0.21%

(0.26)

(0.27%)

(0.37%)

(0.33%)

Euribor rates seem to have hit their bottom since beginning of 2017, especially the rates for 1 and 3 months. Only the 6m Euribor decreased slightly from -0.22% to -0.27%.

Swap rates have widened spreads amongst tenors of 1 year, 3 years and 5 years during the third quarter of 2017 with mid/long term rates increasing by c. 20 bps, while short term rates declined even further.

17

(1.00%)

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

1M Euribor 3M Euribor 6M Euribor

(0.50%)

0.00%

0.50%

2014 2015 2016 2017

1M Euribor 3M Euribor 6M Euribor

(1.0%)

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

1Y Swap 3Y Swap 5Y Swap

(0.5%)

0.0%

0.5%

1.0%

1.5%

2014 2015 2016 2017

1Y Swap 3Y Swap 5Y Swap

PwC

CDS for financials and corporates

18

CDS rates for corporates

Source: Bloomberg

5Y CDS rates for composite of AA rated bonds and A rated bonds that are issued by financial institutions in Europe

5Y CDS rates for composite of AA rated and BBB rated European corporate bonds

CDS rates for European banks

0.35%0.22%

0.46%

0.18%

CDS spreads of a broad composite of European banks provide a proxy of the credit risk perception by the market on financial institutions and are therefore an indicator of their own funding costs in the market. CDS rates for A-rated banks have been fluctuating since mid-2015 between 0.1% and 1.1% with a slight downward trend at the end of the third quarter of 2017 towards 0.35%.

Corporate CDS rates are a proxy for general credit risk perception by the market on corporates. CDS spreads for BBB-rated corporates showed similar developments in 1H17 as CDS spreads for A-rated banks with current BBB corporates spreads marking at around 0.46%.

(1.00%)

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

AA Corporate CDS 5Y BBB Corporate CDS 5Y

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

AA Banks CDS 5Y A Banks CDS 5Y

PwC


Draft

Topical: it’s a borrowers market

PwC

We see financing terms and conditions getting more and more borrower-friendly in terms or (real) leverage levels…

21

Although total leverage seems to be relatively static over the past years at c. 5.0x we do see an increase of senior leverage. Senior leverage for all deals at 4.5x is almost back to pre-crisis levels. For sponsor driven deals the senior leverage at 4.8x is even significantly above pre-crisis levels (of 4.6x).

However, the ‘real’ leverage ratios are actually even significantly higher as borrowers are increasingly allowed to make aggressive adjustments to the EBITDA number. The KloecknerPentaplast recap for example (see page 25) was marketed at a leverage of 5.0x, but when stripping the allowed adjustments from EBITDA, total leverage ended up close to 7.0x.

Source: S&P Capital IQ LCD; ECB guidance on leveraged transactions, Third quarter 2017

Pro forma debt/EBITDA ratios Pro forma debt/EBITDA ratios of sponsored deals

Distribution of debt/EBITDA ratios of sponsored deals

Distribution of debt/EBITDA ratios

3.8x

3.3x 3.2x3.6x 3.5x

3.7x

4.2x 4.3x 4.4x 4.5x1.1x

0.9x 1.1x

0.8x 0.9x0.8x

0.4x 0.4x 0.3x 0.2x

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

2008 2009 2010 2011 2012 2013 2014 2015 2016 YTDSep. 17

First lien/EBITDA Second lien/EBITDA Other debt/EBITDA

3.9x

3.3x 3.5x3.9x

3.6x3.9x

4.3x 4.3x4.5x

4.8x1.1x

0.7x 0.9x0.6x

0.9x0.6x

0.4x 0.4x 0.2x 0.1x

-

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

2008 2009 2010 2011 2012 2013 2014 2015 2016 YTDSep. 17

First lien/EBITDA Second lien/EBITDA Other debt/EBITDA

26%

49% 66%

80% 74% 73% 63%

52% 55% 56% 51%

23%

30%

28% 16%

17% 19% 23%

25% 31% 26% 33%

51%

21% 6% 4%

9% 8% 14% 23%

14% 18% 16%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTDSep. 17

Less than 5x 5x–5.99x 6x or higher

26%

45%

64% 79%

71% 71% 63%

47% 50% 54% 44%

23%

32%

36% 16%

19% 20% 24%

32% 32% 27% 37%

51%

23%

5% 10% 10% 13%

21% 18% 19% 19%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTDSep. 17

Less than 5x 5x–5.99x 6x or higher

PwC

…but also in terms of relative pricing and covenant (lite) setting

22

Although overall margins might have increased somewhat, the actual pricing of debt based on the reported ratios (and not the ‘real’ ratios) has been coming down significantly.

The margin spread per ‘turn of leverage’, which is measured via EBITDA, has come down drastically and marked 84bps by the end of 3Q17, where this was still north of 100bps a year ago

Source: S&P Capital IQ LCD; ECB guidance on leveraged transactions, May 2017; Point 1 of Article 4(1) of Regulation (EU) No. 575/2013

Institutional spread per senior leverage (bps)

Cov-Lite Institutional Volume: Annual Deals with excess cash flow sweep

Besides (real) leverage and pricing also documentary flexibility, such as covenants, continues to move in favor of borrowers. Cov-lite issuance is already at €54bn this year, which represents 74% of the entire deal flow to date.

Another documentary example concerns the significant decrease of documented excess cash flow sweeps, which forces borrowers to mandatory prepay debt with (a part of) excess cash flows. Currently c. 50% of all deals no longer have a sweep in place.

80%86%

78% 79%74%

76%

95%

83%

70% 71%

53%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007(126)

2008(56)

2009(11)

2010(28)

2011(38)

2012(17)

2013(17)

2014(30)

2015(39)

2016(59)

LTM9/17(65)

84.2

0

20

40

60

80

100

120

140

160

180

200

Jul-09 Nov-10 Apr-12 Aug-13 Dec-14 May-16 Sep-17

Inst. spread per senior leverage

74%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Share of Cov-lite deals

PwC


Draft

Recent Deal Activity

PwC

Selected case study

25

Kloeckner Pentaplast

July 2017, S&P Capital IQ LCD

Kloeckner Pentaplast loan provides test amid liquid markets

A sizable recap from Kloeckner Pentaplast is providing a test of how far investors are willing to accede to aggressive sponsor demands, against a backdrop where the depth of liquidity across bonds and loans means add-on acquisitions and dividends are being funded at record-low yields.

The issuer’s latest €1.59 billion, cross-border loan refinancing will fund a dividend, as well as the merger with Linpac, another packaging firm, that was restructured back in 2010. Since its restructuring, Kloeckner Pentaplasthas repaid Strategic Value Partners’ faith in the German maker of plastic films, growing EBITDA from €153 million in the FY 2011/2012 to €216 million.

Now, the combination of Kloeckner Pentaplast and Linpac — two previously restructured firms — means investors are sensitive about the scale of the dividend, and by corollary leverage. The deal takes leverage on a reported EBITDA number of €305 million to roughly 5x secured, according to sources, but after stripping out adjustments, several sources say they are working towards a multiple closer to 7x.

When including a planned offering of €385 million holdco notes, leverage moves to 6.25x on a reported basis, although some investors say they see it as being above 8x, which is in line with S&P’s 8.1x assessment in its ratings outlook.

PwC view“The Kloeckner Pentaplast deal exemplifies the extreme willingness of lenders to invest their pockets of liquidity and the way borrowers make use of this eagerness.

We also recognize the borrowers potential to negotiate for adjustments to EBITDA, lower number of covenants, increasing headroom to those covenants that remain and the overall increase in flexibility that the borrower is granted in the financing documentation”

PwC

Selected leveraged deals Q3 (1/2)

26


Issuer Transaction Margins

Name Industry Country Launch Purpose Primary Sponsor Deal Size (€m) Leverage RC/Tla TLb

Breteche Industrie Group Manufacturing & Machinery France 28/09/2017 LBO IK Partners 215 5.0 E+350 E+375

Domus Vi SA Healthcare France 27/09/2017 Refinancing Intermediate Capital Group 1,150 6.0

CPA Global Services & Leasing United Kingdom 26/09/2017 LBO Leonard Green 341 7.8

CPA Global Services & Leasing United Kingdom 26/09/2017 LBO Leonard Green 341 7.8

SIG Combibloc Group Ltd Food & Beverage Switzerland 26/09/2017 Refinancing Onex Corp. -

Almaviva Computers & Electronics Italy 25/09/2017 Refinancing Not Sponsored 20 2.7 E+450

Civica Services & Leasing United Kingdom 25/09/2017 LBO Partners Group 504 6.8

Tekni-Plex Inc Chemicals United States 25/09/2017 LBO Genstar Capital 248

DentalPro Healthcare Italy 21/09/2017 LBO BC Partners 165 E+450

Clarion Events Services & Leasing United Kingdom 19/09/2017 LBO Blackstone Group 408 5.7 E+350

Clarion Events Services & Leasing United Kingdom 19/09/2017 LBO Blackstone Group 408 5.7 E+350

Interoute Computers & Electronics United Kingdom 19/09/2017 Refinancing Not Sponsored 640 4.2

Miller Homes Building Materials United Kingdom 19/09/2017 LBO Bridgepoint Capital 117 3.1 E+300

ADB Airfield Solutions Aerospace & Defense Belgium 18/09/2017 LBO Carlyle Group 465 6.0 E+325

Cegid Group SA Computers & Electronics France 18/09/2017 Acquisition Silver Lake Partners 120 E+350

Oxea Group Chemicals Germany 18/09/2017 Refinancing Not Sponsored 610 4.2 E+300

Platform Specialty Products Corp Chemicals United States 18/09/2017 Refinancing Not Sponsored 630

Xella International GmbH Building Materials Germany 12/09/2017 Acquisition Lone Star Funds 285 4.7

MCS Groupe Services & Leasing France 11/09/2017 LBO BC Partners 40

Refresco Holding BV Food & Beverage Netherlands 11/09/2017 Acquisition Not Sponsored 1,500 4.5 E+275

Sebia Healthcare France 11/09/2017 Acquisition Astorg Partners 640 8.0

Viridian Group Utilities United Kingdom 11/09/2017 Recap/Dividend I Squared Capital 246

Avantor Performance Materials Inc Chemicals United States 07/09/2017 Acquisition New Mountain Capital 1,000 7.0

McAfee LLC Computers & Electronics United States 07/09/2017 Recap/Dividend Texas Pacific Group 507

STADA Healthcare Germany 07/09/2017 LBO Bain Capital 2,100 5.2 E+325

Pronovias Textile & Apparel Spain 06/09/2017 LBO BC Partners 260 6.0 E+375

Grupo Esmalglass Building Materials Spain 05/09/2017 LBO Lone Star Funds 435 4.5 E+325

Synlab Healthcare Germany 05/09/2017 Refinancing Cinven Ltd 300 6.4

Grupo Cortefiel Retail Spain 04/09/2017 Acquisition CVC 200 3.6 E+350

Praesidiad Building Materials Belgium 04/09/2017 LBO Carlyle Group 400 4.9

PlusServer Computers & Electronics Germany 01/09/2017 LBO BC Partners 240 5.3 E+350

Global Garden Products Holding SA Manufacturing & Machinery Sweden 17/08/2017 Refinancing Not Sponsored 260 E+425

Independent Vetcare Healthcare United Kingdom 09/08/2017 Acquisition EQT Partners 157 E+450

Gardner Denver Inc Manufacturing & Machinery United States 07/08/2017 Refinancing Kohlberg, Kravis & Roberts 230

Equinix Inc Real Estate United States 03/08/2017 Refinancing Not Sponsored -

Dummen Orange NV Food & Beverage Netherlands 01/08/2017 Acquisition BC Partners 75

PwC

Selected leveraged deals Q3 (2/2)

27


Issuer Transaction Margins

Name Industry Country Launch Purpose Primary Sponsor Deal Size (€m) Leverage RC/Tla TLb

Kraton Performance Polymers Inc Chemicals United States 31/07/2017 Refinancing Not Sponsored 260 5.0

Limacorporate S.p.a Healthcare Italy 31/07/2017 Refinancing EQT Partners 60 5.5 E+375

AR Packaging Forest Product Sweden 28/07/2017 Recap/General Recap CVC 470 4.5 E+400 E+475

AVAST Software Computers & Electronics Czech Republic 27/07/2017 Corp Purpose CVC 75

Valeo Foods Ltd Food & Beverage Ireland 27/07/2017 Recap/Dividend CapVest 590 E+375

Valeo Foods Ltd Food & Beverage Ireland 27/07/2017 Recap/Dividend CapVest 590 E+375

PQ Corp Chemicals United States 26/07/2017 Refinancing CCMP Capital Advisors LLC -

Holland & Barrett Retail Food & Drug United Kingdom 24/07/2017 LBO LetterOne Holdings 1,011 5.2 E+400

Cision-Vocus Computers & Electronics United States 20/07/2017 Refinancing GTCR Golder Rauner 250 4.7

Grupo Memora SLU Services & Leasing Spain 20/07/2017 LBO Ontario Teachers Pension Plan 300 E+350

BioGroup-LCD Healthcare France 18/07/2017 Acquisition Not Sponsored 179

HRA Pharma Healthcare France 18/07/2017 Acquisition Astorg Partners 434 5.5

Powerflute Forest Product Finland 18/07/2017 Recap/Dividend Madison Capital Partners 75 4.9

Iberchem Chemicals Spain 17/07/2017 LBO Eurazeo 174 E+425

Generale de Sante SA Healthcare France 14/07/2017 Refinancing Not Sponsored - E+313

Morrison Utility Services Services & Leasing United Kingdom 14/07/2017 Recap/Dividend First Reserve Corp 61 4.8 E+500

Autoform Engineering gmbh Computers & Electronics Switzerland 13/07/2017 Refinancing Astorg Partners 54 E+375

Techem AG Computers & Electronics Germany 13/07/2017 Recap/Dividend Macquarie 1,750 4.7

Diversey Inc Chemicals United States 12/07/2017 LBO Bain Capital 970

Pantheon Healthcare Healthcare United Kingdom 12/07/2017 LBO Permira 300 3.6 E+425

Swissport International AG Aerospace & Defense Switzerland 11/07/2017 Refinancing Not Sponsored 460 5.7

Industrial and Financial Systems Computers & Electronics Sweden 10/07/2017 Refinancing EQT Partners 672 5.5

Industrial and Financial Systems Computers & Electronics Sweden 10/07/2017 Refinancing EQT Partners 672 5.5

QA Group Not for Profit United Kingdom 10/07/2017 LBO CVC 438 6.0

Sky Betting & Gaming Ltd Gaming & Hotel United Kingdom 10/07/2017 Recap/Dividend CVC 581

Mergermarket Printing & Publishing United Kingdom 06/07/2017 Recap/Dividend BC Partners 491 E+350 E+450

Socotec Group Services & Leasing France 06/07/2017 Recap/Dividend Cobepa 425 5.0

McLaren Automotive United Kingdom 05/07/2017 Recap/Stock Repurchase Not Sponsored 102 2.8 E+350

Novacap SA Chemicals France 05/07/2017 Acquisition Eurazeo 225 4.5

European Camping Group Entertainment & Leisure Netherlands 04/07/2017 Recap/Dividend Carlyle Group 314 4.3 E+475

Averys SA Manufacturing & Machinery France 03/07/2017 Recap/Dividend Equistone Partners 236 4.0 E+375

THOM Europe Textile & Apparel France 03/07/2017 Refinancing Bridgepoint Capital 655 4.2

Tipico Gaming & Hotel Malta 03/07/2017 Recap/Dividend CVC 190 5.1 E+350

Faerch Plast Chemicals Denmark 01/07/2017 LBO Advent International 575

PwC


Draft

PwC Debt & Capital Advisory

PwC

Our specialists provide you with independent, market-leading debt advice

29

3 4We are a well-resourced international team, enabling us to drive a financing process, reduce pressure on management teams and ensure we deliver the best terms available in the market

Our team now consists of some 90 professionals in over 20 countries

Our team has a strong background in corporate and investment banking. We know how to ‘frame the ask’ reducing delivery risk and optimizing terms

We have expertise in a range of lending alternatives, and place high priority on developing a sustainable financing structure that fits our client

Deep relationships with a diverse investor community of over 250 global and local investors allow us to provide our clients with liquidity and product flexibility on optimal terms

Our dedicated Debt Markets team keeps us updated on all relevant market developments

Debt & Capital Advisory is part of the global PwC network, offering our clients access to closely linked adjacent services such as M&A, Transaction Services, Tax, Accounting and Legal

Very often, these are relevant and complex aspects to transactions we advise on

Global resource

Banking & structuring experience

Unique access to liquidity

Multi-competence

Independence

Objective advice with no bias to a

particular product or party

PwC

PwC can assist you in every phase of the investment lifecycle

30

• Acquisition debt finance raising• Capital expenditure programme and

working capital finance raising• Construct financing solutions

appropriate to the business and assets being funded

• Advice through public/private bond issuance, including rating advisory

Investment

Maturity

• Solve upcoming debt maturity issues

• Debt market assessment to optimise finance costs

• Identify and structure alternative non-bank sources of capital

Realisation Realisation

• Sell-side staple finance raising• Debt discovery exercise to confirm

market appetite and underpin price • Recapitalisation and equity release

Distress /restructure

• Options assessment, liquidity solutions and covenant renegotiation

• Modelling of sustainable debt capacity in the business

• Stakeholder management and facilitation of consensual solutions

• Investigate alternative sources of fresh capital• Restructure debt to stabilise the business and

preserve value

Growth

Inv

estm

ent

life

cycl

e

Identify best solution / product

Identify appropriate lenders / investors

Run competitive debt process to optimize offers

Analyse and advise you on optimum offer

Negotiate commercial loan documentation

Understand financing issue / need

1

2

3

4

5

6

Our typical process

PwC

PwC as a one-stop-shop for your deals…

31

Corporate Finance M&A

Our network advises on average 350 global sales mandates at any one time, across all industry sectors around the worldConsistently ranked #1 in global league tables

Consulting

Active across a wide range of sectors from telecom to oil & gas

Our recent merger with Booz & Co, now Strategy&, adds significantly to our capabilities in this area

Transaction Services

Leading Due Diligence practice (Financial, Commercial, IT, Legal, Pensions and HR )Provides us with significant sector expertise and knowledge of market best practices

M&A Tax

Market leading M&A Tax practice designing tax efficient acquisition and (re-)financing structures, solving dividend blocks, modelling tax lines and advising on management incentive plans

Business Restructuring Services

Largest global restructuring practice that brings unrivalled knowledge, experience and expertise in restructuring advice and implementation to every case

Capital Markets

Significant experience and knowledge of listing processes (both debt and equity), pricing and ratings advice

PwC Debt & Capital Advisory is a global advisory practice with over 80 dedicated debt professionals throughout our European PwC network

Also, being part of the broader PwC firm we are used to offer clients our services in combination with professionals from other PwC specialties

PwC, a true one-stop-shop

Caspar van der Meer

D&CA NL – Leveraged finance

[email protected]

+31 (0) 88 792 6742

+31 (0) 653 919 934

PwC Debt & Capital Advisory Ard Burgers

D&CA NL – Leveraged finance

[email protected]

+31 (0) 88 792 75 54

+31 (0) 6536 653 49

PwC

…with unrivalled global presence

32

John Williams

Jose Braga

Stephen Oldfield

Hervé Colson

Soeren Kviesgaard

Daniel Judenhahn

Gianandrea Perco

ShoichiOka

Owen Lewis

Piotr Zdrojewski

António Rodrigues

Girish SahajwallaDiego A.

Martinez

Carl-Wilhelm Levert

Aykut Tasel

Matthew Wilde

Stephanie Hogue

Quarterly publications

PwC Debt & Capital Advisory has unrivalled global presence. Every local PwC team has unique access to local liquidity but it is the interconnectivity within the global PwC firm that makes it truly powerful when put to use for our clients

Matthew Santoro

ArdBurgers

PwC

Notes

34

PwC35

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You

should not act upon the information contained in this publication without obtaining specific professional advice. No representation or

warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the

extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability,

responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information

contained in this publication or for any decision based on it.

© 2017 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP (a limited

liability partnership in the United Kingdom) which is a member firm of PricewaterhouseCoopers International Limited, each member

firm of which is a separate legal entity.

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