HeidelbergCement AG, the German cement maker owned by the Merckle family, is offering banks more interest to extend EUR9bn (US$12bn) of loans, according to two people familiar with the negotiations.
Lenders including Deutsche Bank AG, Royal Bank of Scotland Group Plc and Commerzbank AG are being asked to extend the maturity of loans due between 2009 and 2012 by as long as three years, said the people, who declined to be identified because the transaction is private.
In return, the Heidelberg-based company is offering to increase interest margins to between 300 and 400 basis points more than benchmark lending rates, the people said. HeidelbergCement agreed to pay spreads of 35 basis points to 50 basis points for loans with maturities of two to five years to finance its acquisition of U.K. building supplies company Hanson Ltd. in 2007, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.
HeidelbergCement said last month it plans to sell as much as EUR2bn of assets in 2009 to help repay debt. The company has enough cash to meet its debt commitments this year, including a EUR300m 4.75 per cent bond due in April and a EUR7.85bn loan.