Another Cooper-Apollo-merger-is-in-trouble-story

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From Reuters, we have another Apollo-Cooper Tire merger, which, like similar stories as noted by an earlier Biz Buzz post, casts doubts on the $2.5 billion deal.Merge Ahead

Highlights from the Reuters piece, which published yesterday:

 An emerging market one-two punch threatens to derail a $2.5 billion debt financing package backing the acquisition of U.S.-based Cooper Tire & Rubber Co by India’s Apollo Tyres Ltd, sources told Thomson Reuters LPC.

The Cooper acquisition, which would make Apollo the world’s seventh-largest tire maker, could be stumbling amid India’s declining currency and a workers’ strike in China, according to banking sources.

“There are a lot of issues, Chinese issues, Indian rupee issues,” a loan investor said. “If you are a credit investor you’d probably be worried about buying the debt.”

…. Backing the Cooper Tire acquisition is $2.5 billion in new debt at the Cooper level. The amount includes $450 million in recourse loans at the Apollo level and $1.8 billion of non-recourse at the Cooper level.

Around $1.8 billion of the non-recourse portion of the financing is likely to come from a bond fundraising, while another $300 million will be through an asset-based lending (ABL) facility.

The financing is scheduled to launch to syndication as early as September.

 

Written by Dennis Seid

August 28, 2013 at 2:58 pm