Narrative
Full Description
Project narrative
In July 2007, Imperial Tobacco PLC — a British multinational tobacco company cigarette maker — entered into an agreement with the board of Altadis, S.A. — a Spanish-French multinational tobacco company that manufactures and sells cigarettes, tobacco, and cigars and the world's largest cigar company — to acquire Altadis for a consideration of €16.2 billion EUR ($22.4 billion USD) or €50 EUR per share and including Altadis debt being assumed by Imperial. To support this acquisition, a syndicate of banks including Citigroup, Royal Bank of Scotland (RBS), Lehman Brothers, Barclays Capital, and Banco Santander S.A. entered into an agreement with Imperial Tobacco PLC to arrange and underwrite a £9.2 billion GBP (€13.5 billion EUR) syndicated loan for Imperial Tobacco for, among other purposes, partially finance the acquisition and to refinance certain of Imperial Tobacco's and Altadis' current debt facilities. Senior syndication was launched in July 2007, with 16 lenders invited; it closed in August 2007. Then, on March 25, 2008, a syndicate of 21 banks — including the Bank of China (UK) Limited (BOC UK) — entered into a £10.4 billion GBP (€13.2 billion EUR) syndicated loan agreement with Imperial Tobacco to finance the acquisition of Altadis. This loan was divided into three tranches: a tranche with a maturity period of one year and an interest rate based on a floating rate of 60 basis points (bps); a tranche with a maturity period of three years and an interest rate based on a floating rate of 67.5 bps; and a tranche with a maturity period of five years and an interest rate based on a floating rate of 72.5 bps. In addition to BOC UK, the following lenders contributed to the loan syndicate: Citigroup, Barclays Capital, Lehman Brothers, Banco Santander, RBS, Crédit Mutuel-CIC, ING Group N.V., Société Générale S.A. (SocGen), BNP Paribas S.A., Caja de Ahorros y Monte de Piedad de Madrid (Caja Madrid), Natixis, ABN AMRO Bank NV, Bayerische Landesbank (BayernLB), Banco Bilbao Vizcaya Argentaria, S.A. (BBVA), Calyon, Commerzbank Aktiengesellschaft (Commerzbank AG), Deutsche Bank AG, HSBC Bank, HypoVereinsbank (HVB), and Morgan Stanley. The facility received £1.4 billion GBP (€1.8 billion EUR) in general syndication. Seven of the 16 banks that were invited onto the deal syndication did not participate in the final loan; the remaining nine lenders that committed during the senior phase were believed to have committed €775 million EUR each. Multi-currency tickets totaling €400 million EUR, €200 million EUR, €100 million EUR, and €50 million EUR were offered to lenders in general syndication, during which seven banks committed. Barclays Capital, Citigroup, Lehman Brothers, RBS, and Santander served as arrangers and bookrunners, each committing about £700 million GBP (€890 million EUR). ABN AMRO, BayernLB, BBVA, Calyon, Commerzbank, Deutsche Bank, HSBC, HVB, and Morgan Stanley joined in senior syndication, each commitment tickets of about €775 million EUR. Crédit Mutuel-CIC, ING, and SocGen reportedly committed €400 million EUR each in general syndication. BOC, BNP Paribas, Caja Madrid, and Natixis also joined in general syndication. Altadis was formed in 1999 by the merger of France's SEITA S.A. and Spain's Tabacalera S.A., had sales of €4 billion EUR ($5.5 billion USD) in 2006. It owns brands such as Gauloises and Ducado. It owns a 50% interest in Habanos S.A., a Havana-based distributor of Cuban cigars, and a controlling interest in JR Cigars, the leading retailer of cigars in the United States. Altadis' Fort Lauderdale, Florida subsidiary Altadis U.S.A. Inc. makes non-Cuban versions of brands and has a machine-made cigar business with brands such as Backwoods. Imperial planned to dispose of €650 million EUR ($897 million USD) of non-core Altadis assets including property and some of its logistics business and relocate the corporate headquarters from Madrid, Spain to Bristol, England, and hire some of Altadis's management onto Imperial Tobacco's board. The acquisition was expected to close by the first quarter of fiscal year 2008 (the fiscal year in question beginning October 1, 2007, the first quarter ending December 31, 2007). The acquisition was completed on January 25, 2008.
Staff comments
1. It is plausible, if not likely, that the specific intended borrowing institution was a special purpose vehicle wholly-owned subsidiary of Imperial Tobacco. This issue merits further investigation. 2. BOC's contribution is unknown, but it is known it committed in general syndication where the tickets were €400 million EUR, €200 million EUR, €100 million EUR, and €50 million EUR, and €575 million EUR of the loan is unaccounted for. As three lenders are mentioned as committing €400 million EUR and BOC and three other lenders is not, AidData has assumed it did not commit to this level. Still, because €575 million EUR is unaccounted for, the remaining four lenders could not contribute according to the ticket. Therefore, to estimate BOC's contribution, AidData has assumed that each of the four lenders in general syndication that contributed €575 million EUR in total contributed equally (€143,750,000 EUR) to that figure. 3. Its is assumed BOC's contribution went to all three of the tranches. As it is unclear how much BOC contributed to each tranche, assuming they did contribute to each tranche, AidData has taken the average of the maturity periods {[(1 + 3 + 5) / 3] = 3 years} and the average of the interest rate margin and used it to code the margin of interest rate {[(60 + 67.5 + 72.5) / 3] = 66.67 bps} to feed into the interest rate.