Doubling down

18 July 2018 By John Foley Follow @johnsfoley

Its buyout of Thomson Reuters’ financial-data arm comes with features that enhance the seller’s upside if things go very well – but leaves Steve Schwarzman’s investment firm in better shape if things wobble. That ought to help hold the Canadian group’s feet to the fire.

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Blackstone began marketing in June a $5.5 billion loan to support its purchase of a majority stake in Thomson Reuters’ Financial and Risk division.

The loan will later be refinanced with bonds, as part of the $13.5 billion debt package that backs the deal. The bonds will sit alongside $8 billion of loans in U.S. dollars and euros.

Blackstone is buying a 55 percent stake in F&R, along with co-investors GIC and Canada Pension Plan Investment Board, valuing it at $20 billion including debt. Thomson Reuters will retain the other 45 percent.

Public filings show that the acquisition includes warrants that boost Blackstone’s stake to 57.1 percent if its annualized return is below 16 percent, and reduce it to 52.4 percent if the return is above 20 percent.

Blackstone will also invest $1 billion for preferred equity with a 14.5 percent coupon that is paid in more preferred shares, known as “payment in kind.”

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