Wake-up call

16 May 2008 By Jeffrey Goldfarb Follow @jgfarb

Banks are close to selling at least £2.6bn of loans used for the LBO of the UK pharmacy chain, some at a 15% discount to Goldman Sachs and the rest to private equity at 9% off. The deals may not set Europe s leveraged loan market moving at a pace, but they should give it a start.

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The banks that financed the 2007 leveraged buyout of Alliance Boots, the UK pharmacy chain owner, are close to selling as much as £4bn of the debt. Goldman Sachs' mezzanine fund is buying about £600m of secondlien loans at 85% of face value for cash, according to people familiar with the situation.

A group of private equity firms led by Apollo Management, Blackstone Group and TPG is interested in buying up to £2bn of the Senior Term Loan B facility at about 91% of face value, with some sellerprovided financing, sources said. And a portion of a E2bn carveout already has been sold, according to Reuters Loan Pricing Corp.

The banks in the syndicate – Bank of America, Barclays, Citigroup, Deutsche Bank, JPMorgan, Merrill Lynch, Unicredit and Royal Bank of Scotland – either declined to comment or didn't return calls. Not all of them participated in the sales, sources said, though they are continuing to work together as a group in offloading the debt. Goldman Sachs declined to comment. The private equity firms involved either declined to comment or could not be reached.

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