Credit Suisse UBS May Give Loans to KKR Group for Coles Offer
By Joyce Moullakis and Patricia Kuo
Sept. 8 (Bloomberg) -- Credit Suisse Group and UBS AG are among four banks that may provide at least A$11.4 billion ($8.6 billion) in loans and bonds to a group led by Kohlberg Kravis Roberts & Co. seeking to purchase Coles Myer Ltd. for A$17 billion.
Royal Bank of Scotland Group Plc, Britain's second-biggest bank, and Barclays Plc are included on the KKR shortlist of lenders, three people familiar with of the matter said. Other firms such as Citigroup Inc., the largest U.S. bank, and Goldman Sachs Group Inc. may be invited to join if the offer for Coles Myer, Australia's second-biggest retailer, is successful, they said, declining to be identified before details are made public.
Coles Myer this week rejected the A$14.50 a share offer by the KKR group, including Bain Capital LLC and Carlyle Group, saying it gave ``no certainty'' on the equity the group would provide or the availability of debt finance. The board said it would focus on Chief Executive Officer John Fletcher's plan to spend A$910 million rebranding stores and improving service to win back sales lost to Woolworths Ltd.
Melbourne-based Coles Myer will provide shareholders with more detail on the plan and the outlook for earnings on Sept. 21, when the retailer reports full-year profits. The KKR bidding group also includes CVC Capital Partners, Texas Pacific Group, and Pacific Equity Partners.
Coles Myer shares closed 5 cents, or 0.4 percent higher at A$13.70 in Sydney. The stock has fallen 1 cent since the board rejected the takeover offer on Wednesday.
Cleanaway, Brambles
Buyout firms typically finance two-thirds of an acquisition with debt by borrowing against their targets' assets to augment their own funds. They then seek to improve profits before selling the companies within five years to other funds or through initial public offerings.
Ian Smith, an Adelaide-based spokesman for KKR declined to comment. Officials for the banks declined to comment or didn't immediately respond to messages.
KKR got 15 banks to provide A$1.6 billion in loans and bonds for its acquisition of Australia's largest garbage collector and a mining services company from Brambles Industries Ltd. The A$1.83 billion purchase of Cleanaway Australia and New Zealand and Brambles Industrial Services Australia was completed in July
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