LONDON (Reuters) - The banks backing the buyout of Alliance Boots have sold over half of the 750 million pounds of mezzanine debt in the deal, a banking source said on Thursday, in a sign banks are chipping away at a backlog of leveraged buyout loans.

The debt was sold to "multiple investors" at 95 percent of face value, the source told Reuters Loan Pricing Corporation. The trades have been executed and will be funded next week.

"Good progress is being made in this market," the source said. "It's being sold, and its going, albeit slowly, at 95."


Banks globally have an estimated $300 billion (150 billion pounds) of leveraged loans on their balance sheets that have proved near impossible to shift in the past two months due to a credit market crisis sparked by fears of losses from risky U.S. subprime mortgages.



Some have suggested that it will take until well into 2008 to sort out the overhang, raising fears that banks' appetite to lend will remain constrained for many months.

But some chinks of light have started to appear. Banks earlier this week sold a $1 billion block of a $3.5 billion loan backing the buyout of Allison Transmission in the United States, a source close to the deal said.

Kohlberg Kravis Roberts and Boots deputy chairman Stefano Pessina agreed to buy pharmacy chain Alliance Boots for 11.1 billion pounds earlier this year in Europe's largest ever leveraged buyout.

The banks had to put the sale of the senior debt backing the Boots deal on hold in July, and then postponed the sale of the second-lien debt in August as conditions in the credit markets worsened. The source said no decision had been made on the sale of these tranches.



See Original Article

If you are concerned that your business needs help with debt then call the experts. We specialise in Corporate Recovery and can help keep your business trading.

Call us on: 0800 071 1616

Email us on: info@debtsgone.co.uk

Website: www.debtsgone.co.uk