Bahrain-based international investment bank Investcorp has acquired a majority stake in Swiss watch manufacturer Ebel, partly financing the deal with techniques not used before in Europe. The minority shareholding in Ebel will be taken up by the company’s operating management, Pierre Blum and Sandro Arabian, who will be the chief executive officers of the company. They will remain in charge of implementing Ebel’s business strategy.
The acquisition was partly financed through a SF 130 million ($102 million), 7-year loan facility which was arranged by Bankers Trust. This consists of a SF 50 million ($39 million) five-year revolving credit facility and a term loan in two tranches.
The first tranche, worth SF 48 million ($38 million), will be raised through a general syndication, which is due to be completed by end-November. This will be a five-year amortising loan, with an average life of just over three years.
The second tranche, worth SF 32 million ($25 million) will amortise in the sixth and seventh years. The financing comes from mutual funds managed by US companies Merrill Lynch Senior Floating Rate Fund and Van-Kampen Merritt Prime Rate Income Trust. This is the first time this financial structure has been used in Europe.
Paul Soldatos, a member of Investcorp’s management committee, says structuring the financing in this way will allow greater flexibility in Ebel’s cash flow, because repayment is skewed towards the end of the loan period. The Ebel management will be able to use the higher cash flow in the first five years to boost investment in the business.
Ebel manufactures and assembles watches in Switzerland, and produced about 200,000 watches in 1993. They are distributed through about 1,600 retail outlets worldwide, including a large distribution network in the Middle East.
Investcorp has now arranged a total of 51 acquisitions, with a combined value of about $6,500 million. Recent acquisitions include the US’ Saks Fifth Avenue, Circle K Corporation and Camelot Music, the UK’s Thorn Lighting, Italy’s Gucci and the German-based fashion company Mondi. In August, the company announced the acquisition of Star Market Company, a Boston-based supermarket chain (MEED 19:8:94).