Bank of China contributes to €1.8 billion EUR syndicated loan to Advent International for acquisition of Evonik’s methacrylates plastics unit

Project narrative

In mid-June 2019, syndication was launched on a loan in which a syndicate of nine lenders — including the Bank of China (BOC) — provided a €1.8 billion EUR syndicated loan agreement with Advent International — an American global private equity firm — for its acquisition of the methacrylates plastics unit of Evonik Industries AG, a German chemicals company. The financing includes an €260 million EUR revolving credit facility. The syndicate consisted of nine banks: Barclays, Deutsche Bank, Goldman Sachs, Bank of America Merrill Lynch, Bank of China (captured via Record ID#101088), HSBC, Royal Bank of Canada, NatWest Markets and Helaba. The acquisition by Advent comprises Evonik’s Methacrylates, Acrylic Products, CyPlus, and methacrylate resins business lines. The leveraged buyout of the methacrylates unit was valued at EUR 3 billion, and agreed upon on March 4, 2019. The acquisition was completed on August 1, 2019. The first round of syndication was in May 2019 with initial price talk at 475 basis points (bps) to 500 bps over EURIBOR or LIBOR, with original issue discount set at 99 OID and a 101 soft call after six months. In the end, the banks offered the loan to investors at a hefty OID of $0.95 USD on the dollar or euro and pricing it at the wider end of the guidance at 500 bps. Weeks after the launch of the syndicated loan in June, the banks involved were still struggling to sell the loan to investors in the capital markets and were attempting to sell the remainder at a loss for $0.95 USD on the dollar. The soft call was extended to 12 months and some of the other terms flexed, too. The provision keeping banks from selling at a discount larger than 95% of the face value ran out in December, but the parties involved agreed to a synchronized approach with a second round of syndication. In January 2020, the banks relaunched syndication of €977 million EUR and €612 million EUR of term loan Bs, hoping that investors would find this credit more attractive than when it was first syndicated. Price talk for the new round of syndication was similar to the previous time, 500 bps over EURIBOR or LIBOR with 95.0 OID.