Old Mutual lines up £1bn debt facility
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GLOBAL insurance company Old Mutual will soon have access to an extra £1bn which it may use for an acquisition in the UK, according to analysts.
It is expected to have negotiated better interest rates due to the current low-rate regime in the US and the European Union.
Barclays Bank, Citigroup and Lloyds TSB will co-ordinate the order taking. Other arrangers include Bank of America, BNP Paribas, Deutsche Bank, Dresdner Bank and HSBC Holdings.
Old Mutual will pay a commitment fee of 0,16% for access to the five-year credit line. If it uses the facility, it will pay 0,4% above benchmark lending rates.
A spokesman said yesterday the new credit line was "prudent treasury management".
One analyst said having access to such a large amount of money would put the group in a position to act quickly if a deal came its way.
But he said it would probably not want to do anything this year while it sorted out problems at Nedcor in SA and at Pilgrim Baxter in the US.
"It could be another step towards preparing themselves for the ultimate deal."
He said the company was not in financial trouble as it had cash resources in the UK following the sale of privateclient stockbroker Gerrard to Barclays Bank for £210m cash last October.
When it reported its financial results for the year to December, Old Mutual said it could fund its share of Nedcor's R5bn rights issue and buy out minority shareholders in shortterm insurance subsidiary Mutual & Federal without straining its capital.
Apr 20 2004 07:04:25:000AM Stephen Gunnion Business Day 1st Edition
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