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More news on Thursday of the putative cut-price syndication of Alliance Boots senior debt. As the FT reported on Tuesday, the group of banks behind the KKR buyout financing were poised to offload a significant chunk at around 91 cents on the dollar.

Via Standard & Poor’s LCD monitor, it now looks like between £2-3bn is close to sale at that price. The total TLB totals £5.05bn and pays Libor +300.

S&P LCD also reports that a sale is close on the £1bn (Libor +450) of second-lien debt.

Five of the eight banks in on the buyout financing are understood to be selling, while buyers include a host of private equiteers; Apollo, Blackstone, TDR and TPG; and a number of hedge funds.

From S&P LCD:

The price level is 91, sources said, in line with where a strong order book had been gathered just over a week ago after investors were sounded out on their interest in the credit. It is understood that there will be no most favoured nation (MFN) offered to investors. “Private equity is likely to be less concerned about the inclusion of an MFN in the terms of the sale than the more traditional investors,” said one source.

The inclusion of an MFN was understood to be a key sticking point preventing the MLA group from agreeing the terms of a possible sale of a portion of the senior debt 10 days ago. The MFN caused issues both in terms of the mechanics governing the clause, and the time period that it would cover, given the differing selldown attitudes among the arrangers.

What’s interesting though, is some of the detail on how the sale will be funded in the first place. Some of the banks have not, apparently, ruled out the fact that they will be extending credit to existing private equity clients to fund the sales. More Ponzi finance fun then.

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