Ropes & Gray Acts for Mezzanine Investors in High-Profile Securitas Direct Leveraged Buyout

LONDON (19 August 2011) Ropes & Gray represented the mezzanine investors in the recent buyout of Securitas Direct by Bain Capital and Hellman & Friedman. The €395 million mezzanine financing was arranged by Morgan Stanley, MV Credit and Partners Group, among others.

The flat high yield market made the mezzanine financing a useful alternative to an unsecured bond, which became unlikely at the proposed leverage levels behind a senior bond. The debt financing capital structure of Securitas Direct includes a €300 million super-senior revolver, €921.5 million bridge-to-senior secured bonds and a €393.5 million mezzanine tranche.

The Ropes & Gray finance team led the transaction, acting for the mezzanine investors and advising on all structuring and collateral, and the challenging intercreditor issues. The mezzanine loan had incurrence style covenants, so partner Jonathan Bloom and associates Robert Haak and Eric Issadore provided support on the high yield element. Stephen Mostyn-Williams, of smwlaw acted as special counsel advising MV Credit.

The debt structure is unique with a mezzanine loan ranking behind senior secured bonds and gives rise to complicated intercreditor issues which have not been contemplated in the market before. The transaction is the first of its kind and is an indicator of what some believe to be an accepted solution to hung bridge-to-bond loans by lowering the amount of public high yield required to replace the bridges.

The firm’s London office has been involved in the following high-profile transactions:

• Bormioli Rocco Holdings S.A. and VCP VII Luxco 6 S.A.R.L. in connection with the issuance of €250 million 10 percent Senior Secured Notes due 2018 of Bormioli Rocco Holdings S.A.
• The Hanover Insurance Group Inc. on the financing of its acquisition of Chaucer Holdings Plc, the UK-based insurance group.
• Liberty Global Inc. in connection with the financing for its approximate €3.16 billion acquisition of Germany's third-largest cable TV operator Kabel BW Erste Beteiligungs GmbH, from Swedish private equity group EQT Partners AB.
• Certain mezzanine lenders to KCA Deutag Oil Services Group, including funds managed by EIG Management Company, LLC and GoldenTree Asset Management LP, in connection with KCA’s financial restructuring.
• Sankaty Advisors and GoldenTree Asset Management, as Euro note purchasers in connection with the issuance of €110 million eight-year Senior Secured Notes that refinanced the debts of the world's largest specialty alumina products producer, Almatis, resulting in the company's exit from bankruptcy.
• TPG Capital on its €1.2 billion secondary buyout of Ontex NV from Candover Partners Limited.

Ropes & Gray, a global law firm with more than 1,000 lawyers and professionals, provides clients with execution of their transactions from offices in the world’s major centers of business, finance, technology and government – London, Hong Kong, Shanghai, Tokyo, New York, Washington, D.C., Boston, Chicago, San Francisco and Silicon Valley. The firm has consistently globally ranked practices in private equity, M&A, finance, investment management, hedge funds, life sciences, health care, intellectual property, litigation, securities litigation and government enforcement.