European refinancings hit new record

The volume of refinancing of leveraged buyouts in Europe in the first quarter of this year was more than double the figure for the same period last year.

Seventeen LBO refinancings worth a total of $15.6 billion (€12.1 billion) took place in Europe, the Middle East and Africa (EMEA) during the first three months of this year, according to the latest Dealogic Loans Review. This compares to nine deals worth a total of $6.5 billion during the first quarter of 2004.

This represents a sharper increase than the globally aggregated figures, which have grown from 391 deals worth $147.1 billion in Q1 2004 to 408 deals worth $243.4 billion last quarter. The figures reflect the current low cost of borrowing.

The majority of refinancings in the EMEA region were in the telecoms and recreation sectors, which represented 29 percent and 27 percent of volume respectively. The latter was driven by two large ticket deals: the £1.2bn ($2.3bn) refinancing of betting shop owner Coral Eurobet, and the £1bn ($1.9bn) deal for Gala Clubs, a company that operates bingo halls.

The report also noted that three of the quarter’s transactions – Coral Eurobet, Pizza Express and Demag – had also been refinanced during Q1 2004.

A further major refinancing was reported this week. The consortium backing UK department store chain Debenhams plans a £2 billion refinancing allowing an £800 million dividend before a planned flotation, according to Financial News.

The consortium, which consists of CVC Capital Partners, Texas Pacific Group and Merrill Lynch Private Equity, took the company private in December 2003 in a deal worth £1.7 billion, investing an estimated £400 million of equity. To date they have taken out £50 million in dividends, and completed a £495 million sale-and-leaseback of the retailer’s properties to British Land.