Grand Met lifts rate on Pet debt
Wednesday 18 January 1995
Grand Metropolitan planned to raise $600m through the international debt market to help finance the deal, but yesterday had to increase the interest rate for investors to attract them to buy it.
Fund managers, rocked by volatile markets following the Mexican economic crisis, were demanding a better rate of return. To give them this will cost Grand Metropolitan a further $35m (£21m).
Nick Rose, Grand Metropolitan's group treasurer, explained: "We launched the convertible offering last week at a rate of 5.5-6 per cent. But at the end of the week we did a number of roadshows both here and in the US and it became clear that a number of fund managers were nervous about market volatility. So in order to ensure a successful deal, we increased the price of the coupon [the annual interest payment] to 6.5 per cent."
Mr Rose denied that such a move was unprecedented and embarrassing. "From time to time these things do happen," he said. Eventually Grand Metropolitan raised $710m for the deal, but will end up paying more in interest charges.
Grand Metropolitan will also be paying sizeable fees to financial advisers working on the Pet acquisition.
Morgan Stanley, its main adviser, will net a total of $15m. SG Warburg, the other adviser, will be paid £1.3m plus expenses for its services. Grand Metropolitan said: "It's a lot of money, but for a deal this size, the fees are not unusual."
It also emerged yesterday that Pet, the US company Grand Metropolitan is seeking to acquire, is being sued by some of its shareholders, who feel the directors did not seek to obtain the best price for the shares. At least eight class actions have been filed against Pet directors. However, most industry observers say that the $26 per share that Grand Metropolitan paid was a full price considering the shares had been trading at $17 late last year. The company dismissed the actions as of little concern anda fact of life when doing business in the US.
- 1 Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
- 2 18th century sex toy found in 'toilet of sword fighting school' in Poland
- 3 US? China? India? The 10 biggest economies in 2030 will be...
- 4 'I wish my teacher knew...': Young students share their 'heartbreaking' worries in notes
- 5 Rebecca Francis accuses Ricky Gervais of using 'influence' to target female hunters after receiving barrage of death threats
The only black face in the Ukip manifesto is on the page about overseas aid
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...