Natwest Group has won a lead role in the financing for Commonwealth Aluminum Corp.'s acquisition of Castech Aluminum Group.
The London-based bank will lead a $425 million bank loan and will serve as a co-manager on $100 million in high-yield bonds for the Louisville, Ky.-based aluminum sheet manufacturer.
The deal, supporting a $265.3 million purchase, shows that banks outside the top 10 in loan syndications can use the same one-stop-shopping platform as larger banks to win acquisition financing business.
The $425 million loan is divided into three different pieces: a $225 million, five-year revolver; a $100 million five-year A term loan; and a $100 million seven-year B term loan.
The B term loan won't be needed if the company successfully issues $100 million in high-yield bonds, for which Natwest is a co-manager.
Natwest has been ramping up its capital markets abilities over the last year.
The bank on Tuesday hired three equity derivatives executives - Ralph Reynolds, Richard Goldsmith, and Scott Prince - from Morgan Stanley. They will be managing directors at Natwest.
"Their strategy is that this is their entree into the United States, and they have to have good market exposure," said a banking expert familiar with Natwest. "They have to be able to deliver dollar-based products and capital markets capability to their clientele."
As part of its effort to compete for the corporate banking business, Natwest recently applied to the Federal Reserve to create a Section 20 subsidiary. The subsidiary would allow the bank to underwrite corporate bonds and equity.
"Natwest is putting a lot of power into the investment banking business in North America following the divestiture" of Natwest's U.S. bank affiliate to Fleet Financial Group, said Tony Lord, a managing director at Ward Howell International.
In the last year, Natwest purchased Greenwich Capital Corp., a bond trading firm, for $590 million, and Gleacher & Co., a merger and acquisitions adviser, for $135 million.
Pricing on the term loan to Commonwealth Aluminum is the London interbank offered rate plus 300 basis points. Sources said this part of the deal was unlikely be drawn.
Morgan Stanley & Co. is leading the bonds for Commonwealth.
Experts said that the strength of the lending relationship helped Natwest's developing high-yield bond group win a leading role on the bonds.
"This is along the lines of what a lot of commercial banks have done historically," said Arthur Penn, a managing director in high-yield finance at Bankers Trust New York Corp. "When you're trying to shift from bank debt further into the capital structure, you get co-managed slots."