Banks back KKR\'s Raffles Education bid

Banks back KKR\'s Raffles Education bid

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Re: Raffles Education 01-12-2008 10:39:55 Singapore: Banks back KKR\'s Raffles Education bid Hong Kong (RLPC) December 1, 2008 - basis point- A group of at least fivebanks has been heard backing a sole bid from Kohlberg Kravis Roberts & Co totake Singapore Exchange-listed Raffles Education Corp Ltd private through aleveraged buyout. No other sponsors have been heard preparing bids for the asset, a pan-Asianprivate education provider. The Raffles Education buyout has been talked about in the loan markets forseveral months, but it was thought to have gone away in the wake of the collapse of Lehman Brothers in mid-September. However, rumours surrounding the deal intensified in recent weeks, with KKR emerging as the sponsor and a number of banks now linked to a potential buyout. Various banking sources suggest the following banks are close to the KKR bid:Credit Suisse, Mizuho Corporate Bank, UniCredit, UOB and UBS, with UBS taking an advisory role as Raffles\' house bank. Bankers looking at the target said they considered Raffles a solid asset,despite a share price which was down 70% over 12 months at S$0.44 a share on November 28. On the same date, Raffles Education had a market capitalisation of S$1.01bn. One banker looking at the asset estimated the enterprise value at aroundS$1.1bn (around US$733m), which with an offer premium would take the purchase price to around US$1bn. Assuming a debt component of around 55-60% in the current market, recentevents surrounding acquisition and leveraged deals suggest more than five banks would be needed to provide %0the debt. Recent attempts at leveraged and acquisition transactions have been hampered by the limited number of banks able to commit funds, the lack of liquidity within those banks that can commit and the extended timetables needed to getapprovals from credit committees. With share prices tumbling and limited debt backing for sponsor bids, a gulf has emerged between vendors\' expectations on price and buyers\' offers forassets. The result has been a slew of cancelled deals. Source: CLSA