If approved, it would be one of the year’s largest dividend funded by junk debt.
An investor group led by GIC and Silver Lake Management aims to pullout of a $1.25b payout with loan from Ancestry.com, a DNA-analysis and family tree company, in a deal that would be one of the largest payouts funded by junk debt this year, according to a report by Bloomberg.
Silver Lake and GIC acquired a majority stake in Ancestry.com in 2016 in a deal valuing the company at US$2.6b.
Bloomberg data show that Ancestry.com has made about US$1.1b of distributions to equity holders since a Permira-Advisers-LLP-led group took the company private in 2012 as part of an effort to keep investors happy although a number of analysts have sounded caution on the strategy.
“The dividend is a clear step-up in the aggressiveness of the company’s financial policy,” Harold Steiner, an analyst at Moody’s Investors Service, wrote in a note cited by Bloomberg.
Ancestry.com plans to issue a $1.6b seven-year term loan, of which $556.5m in cash will be used to fund recapitalisation, which it plans to use to make a distribution of around US$910m to shareholders and repay US$60m in debt. The company’s owners are also seeking creditor consent to pay an additional one-time dividend of around US$150m at the end of the year and following payout, agreed to use excess cash flow to repay debt.
Read the full report from Bloomberg.
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