What a strange world we live in when banks won’t loan money to help you buy or save your house but they’ll open their coffers if it’s beer you need money for…
To go through with the Anheuser-Busch take-over, InBev borrowed nearly US$55 bi from various banks – Bank of Tokyo-Mitsubishi UFJ, Barclays Capital, BNP Paribas, Deutsche Bank, Fortis, ING, JP Morgan, Mizuho, Royal Bank of Scotland and Santander.
What a feat, considering the financial crisis and the super tight loan market of the latter days.
But by definition, if it is a loan you’ll have to pay it back at some point.
In ABInBev’s case they’ve already paid most of it.
“In our finance package we have the new debt, we have asset disposals and an equity issuance. The new debt was paid out as we completed the transaction, so that’s done. The equity issuance is something that the Board will decide on the best time to do it; we have a bridge of six months after closing to get it done. And for the disposals of US$7bi we have a bridge of up to 12 months after closing. So we’re working very hard on those,” said ABInBev’s Chief Executive Carlos Brito in an interview about the closing of the deal.
He added that they have a list of five “prized assets,” and the company only needs to sell two or three of these to meet its obligations. He did not name the assets but some analysts see almost as certain the sale of Anheuser Busch’s theme parks and its packaging group.
“It’s a high risk strategy but if they get it right there will be great upside potential,” said analyst David Liston at Barclays Wealth, according to Reuters.
ABInBev also said that it plans to cut costs by at least $1.5 billion by 2011 and that will help repay the loans.