Goldman to handle Messer refinancing

In what is likely to be one of the largest junk bond offerings this year, Goldman Sachs is looking to sell EU500 million worth of high yield paper to finance the EU1.6 billion joint buy-out of Messer Griesheim that the bank undertook alongside Allianz Capital Partners.

The duo bought the Frankfurt-based industrial gases business from Aventis, the Franco-German pharmaceuticals group keen to heave off non-core assets and reduce debt. Under the deal, the founding Messer family retains a 33 per cent stake.

According to sources, investors have been waiting for the deal for some time. Market conditions in the high yield space have made it difficult for Goldman to launch the deal. Other options to refinance the buy-out were being considered, among them a mezzanine-based structure.

The deal, if successful, would confirm indications that after a dreadful year 2000 investor appetite for high yield credit is finally coming back to life. There are signs that European high yield issuance, historically an almost exclusive telecoms play, will soon play a significant role in industrial transaction. Merrill Lynch is understood to be currently working on a deal for Laporte.

Despite such apparent signs of life, market participants remain divided over the short-term prospects of high yield in Europe. One senior buy-out practitioner recently told an industry conference in Munich that junk “is still so dead that there is nothing to say about nothing at all.”

This contrasts sharply with recent statement, pointing to market interest particularly in non-telecoms credits, by a high yield fund manager: “Right now you could sell a dog with no legs. There is a good window of opportunity now, and if Goldman pulls its finger out it will be able to sell this deal.”

The bank has not commented yet on the deal.