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June 11th, 2008
- Acquisitions
Seoul Korea - LS Cable seeks $750 million for Superior Essex bid
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South Korea's LS Cable Ltd is eyeing a bid for Nasdaq-listed wire and cable maker Superior Essex Inc and is seeking roughly $750 million in financing, sources familiar say. LS Cable has yet to sign any formal sale and purchase agreement with the target, but is already in talks with selected domestic and foreign banks in South Korea to help arrange the financing, said the banking sources, who declined to be identified given the sensitivity of the matter. Superior Essex has a market value of $887 million, while LS Cable is worth $3.28 billion.
The financing is expected to comprise a $400 million three-year term loan tranche A and a $350 million tranche B that could also have a three-year maturity.
Tranche A, to cover the cost of acquiring Superior Essex, will be borrowed via a special purpose vehicle.
LS Cable will provide a guarantee for this tranche and price talk is at a margin of 300-350 bps over Libor.
Tranche B is to refinance the target company's debt.
Macquarie Bank is the financial adviser to LS Cable, sources said. The Australian investment bank had no immediate comment.
Invited banks will receive a due diligence report early this week and are expected to submit a letter of intent by the week's end.
LS Cable, spun off from LG Group in 2003, has been seeking revenue growth overseas due to a saturated home market. The borrower plans to boost global sales of its super high voltage electrical cables by as much as 20 percent year-on-year in 2008.
Superior Essex Inc. yesterday confirmed published reports out of Asia that it is in discussions with LS Cable Ltd. regarding a potential business combination. LS Cable has proposed acquiring the outstanding shares of Superior Essex common stock for $45 per share in cash. LS Cable initially approached the Superior Essex Board of Directors with a $36 per share proposal on March 24, 2008. LS Cable has advised Superior Essex that $45 per share is its final proposal.
"No agreement has been reached and there can be no assurances that any transaction will result from these discussions. Superior Essex does not anticipate making further announcements with respect to these discussions unless and until a definitive agreement has been reached or the discussions have been terminated." Peggy Reilly Tharp, Director, Investor Relations said
Founded in 1930, Superior Essex is the largest wire and cable manufacturer in North America. One of its core products is magnetic wire, which is commonly used in transformers for industrial motors and generators.
The LS Cable deal could be South Korea's first cross-border M&A financing this year.
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