Mezzanine finance to help fund York's R2-billion acquisition
24 August 2007 | Investments | General | Vantage Capital
Rising like a Phoenix from the ashes of Mpumalanga's forest fires are intriguing details of the financing package designed to facilitate York Timber's purchase of the Global Forest Products business for R2-billion.The R1,1-billlion debt package contains several imaginative features, the most unusual of which is the R430-million mezzanine tranche underwritten by Rand Merchant Bank.
R120-million, or 28%, of this sum has been committed by Johannesburg-based Vantage Capital, a BEE company that specialises in mezzanine finance, a debt class that ranks behind secured bank debt but ahead of equity. Mezzanine products are also known as "hybrids", as they usually combine both debt and equity features.
Luc Albinski, managing partner of Vantage Risk Capital, is gratified that a debt package of this calibre and size contains so substantial a mezzanine funding element. "The growing sophistication of South Africa's debt market is reflected in a keen appreciation of the advantages of mezzanine finance."
Lance Cooper, York's CEO, has said that one of the company's plantations and sawmills had been affected by the blaze. The fire damage had been suffered by an estimated 6 000 hectares of York's 90 000 hectares -- less than 7% of the company's total plantations.
