YBR acquisition to be highly levera

The package launched by Barclays Capital and Merril Lynch to support the financing of the recent Yellow Brick Road (YBR) secondary buyout (page 19 & 29, June 2005), is set to record 8.4x historic earnings before interest, tax, deprecation and amortisation, according to the press. This includes a E125m 'payment-in-kind' loan, a tool where interest is rolled up and paid in the form of bonds. However, despite the high leverage, bankers argue that it can be justified due to strong and reliable cash flows.3i and Veronis Suhler Stevenson sold YBR in a E1.825bn deal earlier this year. The syndicate of buyers included Nikko Principal investments, Macquarie Bank Ltd and Caisse de Dépôt et Placement du Québec.

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