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Latest on Thyssenkrupp Elevator Business Sale

Steel News - Published on Thu, 16 Jan 2020

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Reuters, citing two sources familiar with the matter, reported that bankers are trying to overcome challenges posed by a potential financing backing the sale of Thyssenkrupp’s prized EUR 15 billion elevator division, which needs a massive EUR 2.5 billion of unfunded facilities in addition to up to EUR 7 billion of funded debt. Thyssenkrupp, under pressure after numerous profit warnings, needs to rake in cash by selling all or part of its elevator business, the world’s fourth-largest industry player and by far the group’s most profitable asset. Final bids for the unit, from around two to three bidders, are expected in February following a confirmatory bids process on January 13. In an unusual move, bidders were asked to use the staple financing offered by M&A advisers Deutsche Bank, Goldman Sachs and JP Morgan for confirmatory bids. Typically, bidders put their own lenders in place. They will however, be allowed to organise their own financings for a final bid

Bidders were requested to use the staple financing in the confirmatory stage in order to enable advising banks time to overcome tricky aspects of the financing regarding the vast amounts of unfunded facilities needed, so that they had access to banks that were not tied into exclusivity with particular bidders.

The three banks held a meeting with a broad array of banks and insurance companies this month to discuss raising the unfunded facilities, which would be available to any of the bidders, leaving the buyers to solely concentrate on the equity and funded debt financing.

Reuters also reported that Germany’s RAG Stiftung, a public sector foundation and the controlling shareholder of German chemicals group Evonik, has joined a consortium led by private equity firms Advent and Cinven in a bid for Thyssenkrupp’s EUR 15 billion elevator division. A local player with less strict return targets than private equity, RAG’s involvement may improve the consortium’s chances with labour representatives, who control half of Thyssenkrupp’s supervisory board and need to approve any deal.

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Posted By : Rabi Wangkhem on Thu, 16 Jan 2020
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