KKR-owned MMI completes $580m refinancing

Standard Chartered Bank, ANZ, Bank of America Merrill Lynch, DBS, Cathay United Bank, CTBC Bank, Sumitomo Mitsui Banking Corporation, Maybank, Mega International Commercial Bank, and United Overseas Bank were lead arrangers and bookrunners for the financing.

KKR acquired MMI in 2007 for S$1 billion (then $662 million). The deal was financed out of the US through a $200 million term loan A tranche, a $290 million term loan B tranche, and $110 million in revolving credit facilities. In 2012, MMI issued a $300 million high-yield bond, with a five-year tenor and a yield of 8%. It was the first time a high-yield bond in Asia had been used to take out a buyout loan.

This was only a partial refinancing. A total of $222 million was used to repay the $90 million outstanding on the term loan A and the $72 million outstanding on the revolving credit facilities, as well as $60 million of the term loan B, which had not been paid down at all. A further $75 million took out a bridge loan obtained to support a bolt-on acquisition.

Towards the end of last year, MMI returned to the US market seeking a new term loan B plus second lien - Debtwire put the total package at $580 million, including a dividend recap, with leverage of 4.6-4.7x - but was caught by a widening in the margins. The deal needed to get done as soon as possible so the company went for an Asia-based bank package.

The situation reflects an environment in which US demand for high-yield exposure has weakened, making it harder for sponsors to get acquisition or refinancing packages for Asia-based companies on terms and at prices they can accept. Much as PE firms might like the "covenant lite" and low or no amortization available in the US term loan B and high-yield market, they are not willing to pay any price for it.

The plethora of Asian banks involved in the MMI financing also indicates there is a strong appetite for the right kind of deal among regional lenders.

Last year - before the markets became more difficult - a $520 million term loan B and a $200 million second lien loan were used to support KKR's S$1.4 billion ($1.1 billion) privatization of Singapore-listed intermediate bulk container manufacturer Goodpack at a leverage multiple of around 6x. It is the first time a PE firm has used a term loan B to support an acquisition in Asia.

White & Case advised the lead arrangers and bookrunners on the latest MMI refinancing.

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