“Both Akzo and Refinitiv are established businesses but one has to look in the context of where we are in the economic cycle, cashflow generation, management and past behavior of the sponsor. Investors need to be very careful on the documentation around any deals these days,” Gerhard said.
AkzoNobel’s Deal
Similarly, the terms of the debt financing backing the acquisition of AkzoNobel Speciality Chemicals have sparked concern at at least one major rating company.
The “covenant package provides very weak protection because the covenants include a large number of unusual provisions like allowing asset sale proceeds to be used to make dividends and other restricted payments,” Lisa Gundy, Senior Covenant Officer at Moody’s Investors Service, wrote in a note.
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This article was provided by Bloomberg News.