DEALTALK-Arysta deal shows Asia can push through LBOs
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By Alison Tudor
TOKYO Jan 16 (Reuters) - Investment banks Lehman Brothers LEH.N and JPMorgan (JPM.N: Cotización) have managed to rake together enough partners to fund the buyout of Japanese agrichemical firm Arysta, proving multi-billion dollar leveraged deals are possible in Asia despite a log-jam in global credit markets.
European buyout firm Permira [PERM.UL] bought Arysta for about 250 billion yen ($2.3 billion) in October and then charged Lehman and JPMorgan with bringing together a syndicate of investors to help pay for the deal.
The two banks have sealed the crucial first step of the financing by persuading 14 investors to underwrite the buyout, said three sources directly involved with the deal.
The Arysta acquisition was the biggest leveraged buyout (LBO) in Japan last year and the fourth-largest ever in the world's second-biggest economy, according to researchers at Thomson Financial. Unfortunately for the banks, it coincided with a worldwide crisis of confidence in credit markets.
Investors who had been falling over each other to finance mega-LBOs in the United States and Europe were suddenly reluctant to sign more business, in case they were caught holding all the debt and could not resell some on to others.
The lining up of 14 banks for the 140 billion yen ($1.3 billion) of senior debt for Arysta underscores the differences of the Asian market.
"The Asian model of financing may have seemed less sophisticated before the credit crisis, but now deals are getting done in Asia while the market generally is taking a big hit in places like the U.S. and Europe," said Dennis Barsky, partner at law firm Jones Day, who is experienced in Asian leveraged finance. Continuación...