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MarketScreener Homepage  >  Equities  >  Xetra  >  Evonik Industries AG    EVK   DE000EVNK013

EVONIK INDUSTRIES AG

(EVK)
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Banks face overexposure on Evonik unit buyout loan

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06/18/2019 | 01:43pm EDT
The logo of German specialty chemical company Evonik Industries AG is pictured at their plant in Bitterfeld

LONDON (LPC) - Arranging banks are expected to be overexposed to a €1.785bn (£1.59 billion) leveraged loan backing private equity firm Advent’s acquisition of German chemicals group Evonik’s methacrylates plastics unit, Madrid, after limited success in selling it down, banking sources said.

LONDON (LPC) - Arranging banks are expected to be overexposed to a €1.785bn (£1.59 billion) leveraged loan backing private equity firm Advent’s acquisition of German chemicals group Evonik’s methacrylates plastics unit, Madrid, after limited success in selling it down, banking sources said.

The euro and dollar loans are likely to price at a heavily discounted 500bp over Euribor/Libor at 95 OID, a level where the arranging banks don’t make any of their 1.75% fee.

It is set to close shortly, around a week after commitments were due on June 11, the sources said.

Despite the heavy discount, the underwriting banks could be left long in the paper.

If this is the case, they have considered offering a six-month most favoured nation (MFN) provision at 95% of face value in a bid to protect investors and stop any of the arranging banks dumping the paper at a lower level in the secondary market.

The MFN means that if any of the leads sell lower than 95%, then all of the investors that bought the deal in primary syndication will be compensated for the difference, the sources said.

MFNs that apply on secondary trading are extremely rare in Europe’s leveraged loan market.

Advent was not immediately available to comment.

The loan met some resistance during syndication as many investors see Madrid as a commodities-exposed, cyclical business.

Barclays is lead left on the dollar tranche, while Deutsche Bank and Goldman Sachs are bookrunners. Bank of America Merrill Lynch, Bank of China, Helaba, HSBC, RBC and NatWest Markets are mandated lead arrangers.

Soft-call protection of 101 was also extended to 12 months from six months, alongside a myriad of document changes including restricted payments, the ability to take dividends and margin ratchets, the sources said.

“Evonik did a pretty comprehensive change to documentation,” an investor said.

Evonik agreed to sell its clear acrylic sheet unit to Advent International for €3bn in March.

(Editing by Christopher Mangham)

By Claire Ruckin

Stocks mentioned in the article
ChangeLast1st jan.
BANK OF AMERICA -0.87% 28.965 Delayed Quote.19.52%
BANK OF CHINA LTD -0.27% 3.69 End-of-day quote.2.49%
BARCLAYS PLC 0.83% 158.08 Delayed Quote.4.16%
CRB COMMODITY INDEX 0.10% 195.01 End-of-day quote.0.00%
EVONIK INDUSTRIES AG 1.02% 25.83 Delayed Quote.17.29%
GOLDMAN SACHS GROUP INC 1.64% 214.89 Delayed Quote.26.66%
HSBC HOLDINGS PLC 0.49% 670.5 Delayed Quote.3.14%
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Financials (EUR)
Sales 2019 13 512 M
EBIT 2019 1 257 M
Net income 2019 813 M
Debt 2019 1 095 M
Yield 2019 4,53%
P/E ratio 2019 14,6x
P/E ratio 2020 13,8x
EV / Sales2019 0,96x
EV / Sales2020 0,96x
Capitalization 11 925 M
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Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 30,36  €
Last Close Price 25,63  €
Spread / Highest target 56,1%
Spread / Average Target 18,5%
Spread / Lowest Target -10,3%
EPS Revisions
Managers
NameTitle
Christian Kullmann Chief Executive Officer
Ute Wolf Chief Financial Officer
Wolfgang A. Herrmann Member-Supervisory Board
Siegfried Luther Member-Supervisory Board
Volker Trautz Member-Supervisory Board
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