Bankers Trust New York Corp. and Credit Suisse First Boston are leading a loan package to help back London-based Cadbury Schweppes' planned purchase of two U.S. bottling companies.
The British beverage and candy concern is teaming up with the Carlyle Group, a Washington leveraged buyout firm, to buy Beverage America of Holland, Mich., and Select Beverages of Darien, Ill. The two bottling companies will be merged, forming American Bottling Co., which will be 40% owned by Cadbury and 60% owned by Carlyle.
At a bank meeting in New York this month, Bankers Trust and Credit Suisse First Boston will be seeking commitments for a $600 million credit facility to partially finance the buyout. Banks that have relationships with either Cadbury or Carlyle or that have a knowledge of the bottling industry are being invited, said a banker close to the deal. Commitments will be due around the end of March.
Bankers Trust will be the administrative agent, underwriting 60% of the debt, and Credit Suisse First Boston will be the syndication agent, underwriting the remainder.
The debt package will include a $150 million, seven-year revolver; a $300 million, seven-year A loan; and a $150 million, nine-year B loan.
Another $300 million of equity will be used to meet the $724 million purchase price, with the additional funds to be used for seasonal working capital movements and restructuring costs, according to Tim Owen, Cadbury's treasury director. Carlyle will be putting up 60% of the equity; Cadbury, the remaining 40%.
Mr. Owen said he chose the two lead banking companies after reviewing a number of big players in the leveraged loan market. "These were the best two," he concluded.
Cadbury does not have a historical relationship with either bank and has never worked with the buyout firm, according to Mr. Owen. Its cash management in the United States is handled by Chase Manhattan Corp. Cadbury has worked on international deals with both BankAmerica Corp. and J.P. Morgan & Co.
The Carlyle Group was chosen as a partner because, Mr. Owen said, it would "bring a strong, independent financial discipline to the project. And I felt they were people we could get on with."
Executives at Cadbury are hoping the company's 40% stake in the new bottling concern will facilitate distribution of its beverages in the United States.
"Our Dr. Pepper brand has a very secure route with both Coke and Pepsi," Mr. Owen said. "But some of our other brands are distributed predominantly through the independent bottling system, and that's not as efficient."
After the buyout and merger, American Bottling will have about 5,000 employees and annual sales approaching $1 billion. Cadbury and Carlyle have not yet decided where to base the combined company but are looking at Illinois.
