![]() ![]() Bidders would have to rely on JPMorgan's debt package or arrange their own financing to clinch a deal with Subway, and then refinance through a WBS scheme down the line, the sources said.īarclays Plc, a major player in the market for WBS financing, is one of the banks in discussions about long-term financing, the sources said. WBS financing requires store-by-store due diligence by ratings agencies which can take more than a year. This would involve borrowing using the royalties of restaurant franchises as collateral. ![]() This is because a cheaper option for a private-equity buyer of Subway would likely be to finance the acquisition long-term through a so-called whole business securitization (WBS), the sources said. It is possible that this financing will serve only as a temporary solution. The debt financing is based on a mix of loans and bonds and its size is equivalent to 6.75 times Subway's 12-month earnings before interest, taxes, depreciation and amortization of about $750 million, the sources added. Subway's financial adviser, JPMorgan Chase & Co, is now hoping a $5 billion debt financing package it has put forward will show buyout firms they can borrow enough to structure an attractive deal even at a $10 billion-plus valuation, the sources said. ![]() So far, bids for Subway have ranged between $8.5 billion and $10 billion, one of the sources said. ![]()
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