KKR-backed MMI plans $300m high-yield bond issue

Singapore-based MMI, which manufactures components for hard disk drives, has appointed Credit Suisse, J.P. Morgan and UBS as lead banks for the five-year bond, Reuters reported. KKR Capital Management will also participate.

The bond will pay down about $222 million outstanding on the existing financing package as well as $75 million of a bridge loan MMI used to acquire IntriPlex Technologies. KKR initially wanted to take the company public in 2011 through a $1 billion offering but it was abandoned due to poor market conditions.

Although high-yield bonds are commonplace in private equity financing in the US and Europe, they have yet to become established in Asia. As it stands, only Unitas Capital has successful used one in a leveraged buyout - last year's acquisition of Hyva - and it was principally marketed to US investors.

However, the combination reduced capacity in the bank financing market in recent months and lower leverage multiples that have been in place since the global financial crisis, has put the squeeze on private equity firms. In the absence of mature mezzanine solutions, other forms of financing are being considered and if the MMI issue signals a revival in the wider high-yield bond market will come as a relief to many.

Industry participants tell AVCJ that only the strongest companies - those that have strong private equity sponsors, sensible transaction structures and commanding market positions - will be able to secure financing.

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• Topics
• Financing
• Buyouts
• Southeast Asia
• Leveraged finance
• KKR
• buyout
• Southeast Asia
• Financial Services