The banks arranging the 3.3 billion euro loan backing the German investor Joh A Benckiser's (JAB) 7.5 billion euro ($9.74 billion) bid for Dutch coffee and tea company DE Master Blenders 1753 launched the deal to funds on Tuesday, banking sources said.
The banks are looking to raise 1 billion euros from funds -- 60/40 in euros and dollars, respectively -- which will supplement funds raised from around 15 banks that were invited in the first phase of syndication.
The fully underwritten all-senior loan is being arranged by Bank of America, Citibank, Rabobank and Morgan Stanley.
A series of five meetings were held on Tuesday with around 20 funds, which were asked to commit a minimum of 50 million euros each, bankers said.
Funds will be offered a commitment fee to compensate them for their commitments until the acquisition closes and funds are drawn, which is expected in July.
The deal is structured as a 1.25 billion euro, three-year term loan A at 350 bps over EURIBOR, a 1.75 billion euro, five-year term loan B at 375 bps and a 300 million euro, five-year revolving credit facility, 350 bps.
The size of the 1 billion euro institutional tranche and the mix of euros and dollars may be adjusted depending on the response from banks, which has been positive so far, according to the leads.
15 banks were asked to commit 200 million euros each for a fee of 150bps in the first phase of syndication. Lenders would prefer to be scaled back to around 150 million-160 million euros of exposure, given the company's credit rating.
The 1 billion euro institutional carveout of the five-year term loan B has a 1 percent Libor floor which guarantees returns to investors.
Master Blenders is currently rated BBB/Baa2, but is expected to have a BB- credit rating after the acquisition, bankers said. ($1 = 0.7703 euros) (Editing by Christopher Mangham)