Magazine article American Banker

Investcorp Seeks Underwriters for Circle K Bid

Magazine article American Banker

Investcorp Seeks Underwriters for Circle K Bid

Article excerpt

Investcorp SA has approached about a dozen potential underwriting banks to help finance a $ 425 million bid to buy convenience store operator Circle K Corp. out of bankruptcy proceedings.

The Arab-backed investor group, owner of Saks Fifth Avenue, is trying to line up more than $ 200 million in bank loans for the bid, banking sources said.

At a meeting last Friday, Investcorp partners walked bankers through the deal and asked for a response within two weeks.

Among those attending the Friday meeting were Chemical Bank and Chase Manhattan Bank.

Apart from Chemical, none of the banks has an existing lending relationship with Circle K, which filed for protection from its creditors under Chapter 11 of the federal bankruptcy code in May 1990.

Chemical's Texas Commerce Bancshares subsidiary is a member of Circle K's existing bank group. Led by Citicorp, the bank group is owed about $ 340 million.

The Only Offer to Date

It's estimated that the banks woyld recover about 50 cents to 55 cents on the dollar, under terms of the Investcorp bid.

Circle K bank loans currently trade in the low 50's, indicating that investors in the distressed-loan market expect a somewhat better deal to emerge either from Investcorp or another bidder.

Circle K bondholders stand to gain little from the Investcorp acquisition, and have been soliciting other bids. So far, though, no other offers have emerged.

A New Approach

The Federal bankruptcy court in Phoenix, which is handling the Circle K case, has scheduled a hearing in July to review bids. …

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