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 With leveraged lending still tight as a drum, mega-LBOs are few and far between. But that's not stopping private equity giant Kohlberg Kravis Roberts & Co. from getting its $1.8 billion carve-out of South Korea's Oriental Brewery Co. Ltd. from Anheuser-Busch InBev NV/SA from getting financed. The New York buyout shop beat out competing bids from Affinity Equity Partners, MBK Partners and South Korean conglomerate Lotte Group (some of which were higher than KKR's) to get the deal since it was able to make its offer with a financing offer in place. But it was no easy task as the firm approached as many as 20 banks, obtaining commitments from a club of eight to provide the 55% of the deal price that is being financing, a source told The Deal. (Deal Pipeline subscribers can see the story here.) Supplying the debt are Standard Chartered plc, Nomura Holdings Inc., J.P. Morgan Chase & Co. (NYSE:JPM), HSBC Holdings plc (NYSE:HBC), Calyon, ING Groep NV (NYSE:ING), Natixis SA, Banco Santander SA (NYSE:STD), Hana Bank and WestLB AG. KKR is paying a steep premium as an unnamed source tells Bloomberg that the LBO firm is shelling out LIBOR plus 600 basis points for the $900 million it is borrowing. The other $800 million in equity will come out of KKR's $4 billion Asia-focused fund. KKR's ability to get the banks to sign on to the finance is a ray of light for the leveraged lending markets, which left banks stuck with over $300 billion in hung debt after the credit crisis began in July 2007. After the banks took major write-downs on those loans, they became exceedingly wary about committing to financing new leveraged buyouts, especially since a global recession squeezes debt-laden PE portfolio companies and the dormant CLO market leaves banks with few options for syndicating the debt out. Looks like the days of easy financing are well and truly over. - George White See Deal Pipeline story See Bloomberg story
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