SK Telecom and Macquarie Korea Asset Management are likely to smoothly finish refinancing of the debt they took to fund the takeover of South Korean security firm ADT Caps Co Ltd. 

A syndicate of lenders is likely to issue letters of commitment to participate in a syndicated loan for the acquisition of ADT Caps, industry sources said on September 18. Arrangers of the acquisition financing are expected to set the allocation of loans as early as this week.

The latest deal has been arranged jointly by KB Kookmin, KB Securities, Shinhan Bank, Shinhan Investment Corporation, Korea Investment & Securities and Samsung Securities. The refinancing process started in July in earnest. KB and Shinhan Financial Group are expected to arrange 35% of the total sell-down, respectively, while Korea Investment & Securities and Samsung Securities will arrange about 20% and 10%, respectively.

The deal attracted strong interest from financial institutions despite unfavorable conditions including the outbreak of the Covid-19 and lower interest rates on loans. The total amount of the acquisition financing is 2.05 trillion won, including a 100 billion-won revolving credit facility. The loan bears interest of a 3.2% with five-year maturity.

The deal is to refinance existing debt with a new loan at lower rates. Insurance companies, banks and national federations have shown interest in the deal while pension funds and mutual aid associations decided not to participate due to lower returns compared to other investments.

The arrangers of the refinancing received letters of intent from financial institutions for the syndicated loan last month and attracted more than 150% of its target amount.

The fact that credible borrower SK Telecom is leading the deal and ADP Caps is showing positive financial performance have lured investors. ADT Caps’ year-on-year revenue and operating profit increased by 21% and 30%, respectively, in 2019. Its earnings before interest, taxes, depreciation and amortization (EBITDA) also increased from 241.3 billion won in 2018 to 308.6 billion won in 2019. (Reporting by Hye-ran Kim)