The first high yield issue under a so-called double luxco structure has proved it is possible to protect junior creditors in French leveraged buyouts (LBO). It also sets a high benchmark for banks’ negotiations with subordinated lenders in future deals.
Like most recent French LBOs, Lion Capital’s acquisition of frozen food company Picard (for €1.6 billion) earlier this month used a double luxco structure. What’s different is that €300 million of the price tag was funded through high yield debt.
“People said that implementing a double luxco structure that incorporated high yield notes would be difficult,” said Ward McKimm, a London partner with Shearman & Sterling who acted for the high-yield underwriters.
“This is because in previous double luxcos the subordinated instrument was mezzanine, which had been content with fewer protections on enforcement,” he said.
But closing the deal...