Done deal?

24 January 2006 By Taron Wade

Ineos record E3.1bn bond to partially fund the UK chemicals company s acquisition of Innovene should be popular. Although bond investors are starting to get nervous, they like Ineos and the arranging banks have used a savvy selling strategy.

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The planned yield on Ineos' record junk bond has been cut to 8% from 8.5% following interest from investors. The privately held UK chemicals business is planning to issue E3.1bn of highyield bonds, in what would be Europe's largest ever offering. The previous record was held by Seat Pagine Gialle, which issued a E1.3bn bond as part of its buyout in 2004.

Ineos, which marketed the deal in Europe last week, starts investor meetings in the US this week.

The bonds have a 10year maturity and are split into a fixedrate portion that is callable after five years and a floatingrate part that is callable after two years. They are rated B by Standard & Poor's and B2 by Moody's Investors Service.

The bonds are part of the financing for Ineos' purchase of BP's petrochemicals and refining arm Innovene for $9bn (E7.9bn). Ineos is raising a total of E9bn in order to pay for Innovene and refinance existing debt. The remaining E6bn is being sought through the private bank market.

The bond and bank loans are being arranged by Barclays, Merrill Lynch and Morgan Stanley.

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