Anheuser-Busch InBev NV said it obtained $75 billion of loans to back its acquisition of SABMiller Plc, in what is the biggest corporate loan on record.
The senior facilities will be divided into five parts, according to an investor presentation on AB InBev’s website. Allen & Overy advised lenders including Banco Santander SA, Bank of America Corp., Bank of Tokyo-Mitsubishi UFJ Ltd., Barclays Plc, BNP Paribas SA and Deutsche Bank AG, according to a statement from the law firm.
“AB InBev’s ability to raise $75 billion in the loan markets in the space of a few weeks shows that banks are still willing to support top-class borrowers in record amounts, despite the current era of increased regulatory and capital costs,” Nicholas Clark, a partner at A&O in London, said in the statement. “This is the largest commercial loan in the history of the global loan markets, far surpassing pre-crisis values.”
AB InBev made a formal $107 billion offer to buy SABMiller on Wednesday, sealing a long-anticipated deal that combines the world’s biggest brewers into a company controlling about half the industry’s profit. Borrowing to fund the takeover may bring AB InBev’s net debt to 4.5 times earnings before interest, taxes, depreciation and amortization, according to Trevor Stirling of Sanford C. Bernstein. It was at 2.5 at the end of the second quarter.
Bond Sale
There are more than 20 banks in the lending group, according to two people familiar with the matter, who asked not to be identified because they’re not authorized to speak publicly. While part of the loan will be replaced by bonds, a sale may not come for about nine months because of regulatory approvals, the people said.
The loans are structured so that interest will increase over time to encourage the company to refinance, according to the people. The bonds will be sold in different currencies at various maturities, the people said.
AB InBev will replace the bank financing with bonds “as soon as practically possible,” Felipe Dutra, AB InBev’s chief financial officer, said on a conference call with investors on Oct. 7.
Mega Bonds
The brewer is planning to sell the equivalent of as much as $55 billion of bonds across multiple currencies and maturities, people familiar with the matter said last month. That sale will also be a record, exceeding the $49 billion of bonds that Verizon Communications Inc. raised two years ago to fund its buyout of Vodafone Group Plc’s stake in a wireless venture, according to data compiled by Bloomberg.
The bonds may be offered to investors at a premium in order for the market to absorb them. Verizon offered as much as 0.47 percentage-point more than what debt with similar ratings and maturities was yielding at the time.
The loan comprises a $25-billion three-year term loan A facility, with the option for a one year extension; a $10 billion five-year term loan B; a $10-billion one-year disposals bridge facility; a $15 billion two-year bridge-to-cash facility and $15-billion one-year bridge-to-cash loan with a one-year extension option, the document shows.
Proceeds from the sale of SABMiller’s interest in MillerCoors and the global Miller brand will be used to pay down and cancel the disposals bridge facility, followed by the bridge-to-cash portions, according to the presentation.
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