Alfa Invites Banks to Loan

Mexican conglomerate Alfa has set bank meetings for New York Tuesday and Mexico next Friday, according to bankers with knowledge of the transaction. It is heard to be offering a spread of 300bp over Libor on a leveraged grid for its syndicated loan to back the $600m purchase of Eastman Chemical assets in the US. A $600m 3-year bullet facility is expected to be syndicated. Credit Suisse and HSBC are the leads. Alfa’s purchase of Eastman’s polyethylene terephthalate resins business and related assets and technology of its Performance Polymers segment was done by Alfa unit DAK Americas. BAML advised Eastman while HSBC worked on the buyside. Fitch downgraded Alfa subsidiary Grupo Petrotemex to BB (stable) from BB+, including notes issued by DAK, amid fears over leverage incurred in the purchase. On a pro-forma basis, Fitch estimates that Petrotemex’s total debt-to-Ebitda, including 12 months of Eastman assets operations, could reach 3.3x in 2010 before gradually decreasing. This compares negatively with a total debt-to-Ebitda ratio of 2.2x for the 12 months to June 30, and falls outside Fitch’s prior leverage estimate of 2.0x-2.5x. Nonetheless, Fitch notes that the investment is strategic and positive for Petrotemex, and should strengthen its business as it gains PET market share in North America.