Apollo's Ventia asks for $1.6b, five banks on board

Apollo Global Management and CIMIC Group's services contractor Ventia has lobbed a $1.6 billion litmus test into Australia's leveraged loans market.

It is understood Ventia is pitching credit funds for $600 million to help buy Ferrovial's Broadspectrum, and is also asking existing investors to accept a new price and terms on the company's existing financing package worth $1 billion.

Should it come off, it would see Ventia emerge with $1.6 billion in a mix of Australian dollar and US dollar debt, both issued under term loan B structures and all of it maturing in 2026.

Investors were told the $A tranche was likely to price at 550 to 575 basis points above the bank bill swap rate, while the $US deal hit the market with price talk at LIBOR plus 450 to 475 basis points.

It also launched with a $97 issue price - providing a $3 a bond carrot (or original issue discount) for those buying into the raising.

Barclays Bank, Citi, Credit Suisse, JPMorgan and UBS were overseeing the deal and were calling for commitments by June 11, according to information sent to potential investors.

A big part of the pitch was the Broadspectrum acquisition and how it was likely to diversify Ventia's revenue. While the two groups provide operation and maintenance, facilities management and design and construction services, there's little overlap in their targeted sectors. Ventia's much more reliant on telecommunications services and the nbn, for example.

The raising comes soon after Ventia received regulatory clearance to buy Broadspectrum. Broadspectrum reported $2.74 billion revenue and about $50 million earnings last year, Ferrovial said. The deal, worth $524.5 million, was announced just prior to Christmas. The combined group would have annual revenue worth more than $5 billion.

Ventia's loan will be closely watched. At $1.6 billion, including the existing $1 billion loan, it's one of the bigger Australian issuers into the term loan B market.

It also comes as borrowers go to credit markets for Australian leveraged loans, following the COVID-19 inspired market meltdown. The other deal is in the market is US private equity firm Madison Dearborn Partners' $725 million raising for its acquisition of local employment and disability services player APM. Bank of America is running that deal.

Ventia's acquisition comes as owners Apollo and CIMIC have considered their strategic options in recent years, including a few rounds of detailed talks aimed at CIMIC buying out its private equity partner.