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Private equity gets easier ride in Europe
Nick Goodway02.12.08
European banks are more prepared to waive conditions on loans to private equity-owned firms than their American rivals as they seek to avoid further major writedowns on their loans.
Barclays Capital is negotiating waivers on the £5.8 billion of debt at Ineos, the UK's largest chemical maker, which was bought out from BP three years ago. Around £1.6 billion of that debt is repayable within the next three years. Its debt rating was cut yet again last month.
Ineos has asked its 233 banks and advisers, including Barclays and Merrill Lynch, to agree new terms including an upfront payment of 0.5% and a premium of as much as 1.25% a year, according to its finance director John Reece.
Leveraged loans are high-risk, high-yield debt that has fallen below investment grade. Banks are trying to avoid such borrowers going under and crystallising losses.
According to Bloomberg, 22 such leveraged European companies have negotiated waivers this year and only one has been refused.
Spanish cable firm Cableuropa paid a 1% fee for waivers on its loans, which are led by Royal Bank of Scotland.
