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Berkshire Hathaway Inc. Message Board

  • axpkocop axpkocop Mar 21, 2013 4:43 PM Flag

    Funding for HNZ Deal Going well

    "Total equity investment in the transaction is $16.24 billion. Berkshire Hathaway is committing $12.12 billion - $8 billion preferred (9% dividend) and $4.12 billion common equity. 3G will invest US$4.12bn in common equity.

    Meanwhile Heinz is also selling $2.1 billion in second-lien notes to refinance a second-lien bridge loan.

    Investors said the B1/BB- rated bond issue, which prices on Friday, has been a blowout, with massive demand that has allowed Heinz to shave more than a full percentage point off of pricing expectations, to official guidance of 4.5% area from initial price thoughts of 5.75%.

    While that rate has been roughly typical of Double B-rated bond deals in recent weeks, it's certainly not the norm to see debt being used to fund an LBO that prices with such a low coupon, or rate of interest.

    "This is being priced like a very strong non-LBO Double B bond," said the bond investor. "There is definitely an intangible glow around this deal."

    But he cautioned: "In my view, it's still a highly leveraged transaction."

    Only 4.5% interest for BB-rated bonds. If this deal was done 5 years ago we would have paid double these rates.

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215,600.00-1,375.00(-0.63%)Oct 21 4:00 PMEDT