Wants $155 million.
The funds raised would allow private equity owner Bain Capital to reduce its equity investment, claimed the Fin Review. The subordinated or “mezzanine” notes will pay a high interest rate of 9 to 10 per cent. Morgan Stanley, UBS, Deutsche Bank and Macquarie were appointed on the raising while ANZ Banking Group and Westpac were also appointed to manage the sale.
A MYOB spokesperson refused to comment on the raising. “It’s MYOB company policy to not respond to speculation. We’re currently focused on realising our growth potential through the roll-out of new business management solutions such as AccountRight Live,” the spokesperson said.
The retail note was a highly unusual, specialised debt instrument that was probably intended to give Bain “some breathing space”, said Michael McCarthy, a market analyst from CNC Markets, a trading analytical firm.
“One of the keys for private equity is turning your capital over. So the longer you’re locked into a deal theoretically, unless you get the multiplier effect, you’re concerned because you want to free up your capital to invest into other opportunities,” McCarthy said.
“If they felt that this enterprise were to significantly increase in value any time soon they probably wouldn’t be doing this. It’s expressing a “Goldilocks” view – the company is neither growing too fast nor is it growing too slowly.”
The note was probably a converting preference that would rank behind the senior debt holders and above the shareholders, such as Bain, McCarthy said. The retail note has been rarely used to raise debt by private equity companies and was usually announced after investors had been found. Similar past listed note offers had been made by Healthscope, Myer and Affinity Health.
“Bain would have offered someone the deal and they have talked. So that’s why MYOB wouldn’t want to comment right now, they’re probably in the middle of negotiations,” McCarthy said.