Lovells

SABMiller plc (SABMiller), the world's second largest brewer by volume, has successfully raised US$2 billion in a debut issue of London listed, investment grade, corporate bonds.  Lovells acted as lead and co-ordinating counsel for the issues. 

SABMiller has raised a total of US$2 billion in its debut issue in the corporate bond markets, with a three part issue of US$600 million 5 year notes and US$1.1 billion 10 year notes by Miller Brewing Company, and US$300 million 30 year notes by SABMiller plc.  The Miller issue is guaranteed by SABMiller plc and SABMiller Finance B.V. (SABMiller Finance), and the SABMiller issue is guaranteed by Miller and SABMiller Finance.  The proceeds from the Miller issue have been used to refinance Miller's existing short term bank debt, and the proceeds of the SABMiller plc issue will be used for general corporate purposes.  SABMiller has been assigned first time long term corporate credit ratings of BBB+/Baa1 (Stable/Stable) by Standard & Poors and Moody’s.  

SABMiller is the product of the UK/US merger of South African Breweries and Miller Brewing Company in 2002, and as a result has complex tax and funding requirements, which necessitated significant preparatory work to ensure that the final transaction structure had the commercially appropriate profile for credit rating and investor purposes.  The transaction successfully priced and closed against the back-drop of some of the most volatile bond markets seen in recent years.  

The Lovells team was led by corporate partner John Davidson and equity capital markets partner Richard Brown, with senior associate Daniel Bingham.  Advice on UK and US tax structuring and related matters was provided by Lovells' tax partners Lyndsey Bainton in London and Joe Gruber in New York, and on Dutch legal issues by partners Ken Breken and Gerrit-Jan Bolderman in Lovells' Amsterdam office.  

John Davidson, speaking for the Lovells team, said:  

"As a first time issuer, this was a landmark transaction for SABMiller and we were delighted to be able to assist.  In what proved to be highly volatile markets, it was very satisfying to be able to bring such a significant issue to a successful close, with a high degree of coordination and cooperation among the whole of the advisory team and SABMiller's project team.  Working closely with our US and Dutch colleagues and US/UK tax teams, the deal also allowed us to demonstrate our strength in developing and implementing complex and innovative cross-border financing solutions."  

SABMiller was also advised on US securities law issues by Dewey Ballantine through a team led by capital markets partners Louise Roman Bernstein and corporate partner Stephen Jones in London, and capital markets partner Glen Pollner and tax partner Thomas Giegerich in New York, and on South African law issues by partner Cari Versfeld of Werksmans in Johannesburg.  The lead managers - Barclays Capital, Citigroup and JP Morgan - were advised by partner Paul Kumleben of Davis, Polk and Wardwell's London office.

SABMiller plc

SABMiller is the world’s second largest brewer by volume, with lager volumes of 116 million hectolitres in the year ended 31 March 2003 (including a nine-month contribution from Miller).  It has brewing operations in 40 countries across Africa, Western Europe, Central and Eastern Europe, North and Central America and Asia.  It has a portfolio of strong brands and leading market shares in many of the countries in which it has brewing operations.  Outside the USA, SABMiller is one of the largest bottlers of Coca-Cola products in the world, with total carbonated soft drink volumes in the year ended 31 March 2003 of 22.1 million hectolitres.

SABMiller is listed on the London and Johannesburg stock exchanges and has a market capitalisation of approximately US$7 billion (R50 billion).

SABMiller plc and Lovells
 
Lovells has acted for SABMiller since 1998 on a series of international corporate and capital markets transactions commencing with SABMiller's £3.4 billion listing on the London Stock Exchange in March 1999; the US$612 million synthetic treasury stock structure implemented in September 1999; the US$600 million convertible bond issue in August 2001, a $420 million equity placing in December 2001; and last year the US$5.62 billion acquisition of Miller Brewing Company from Altria Group (formerly Philip Morris Companies, Inc), which completed in July 2002, and a subsequent US$1 billion equity placing, which was pulled because of adverse global securities market conditions.  Earlier this year, Lovells' London, Milan and Rome offices advised on SABMiller's acquisition of Birra Peroni S.p.A., with an enterprise value of some US$683 million.

Lovells' equity capital markets practice

Lovells' equity capital markets lawyers are based in all the major financial centres in Europe, Asia and the US, where they act for underwriters, issuers and securities holders. Lovells' experience includes international and domestic equity offerings in single and multiple jurisdictions, involving retail offerings and private placements.
 
Recent experience includes: 

• advising Deutsche Bank and Cazenove on the underwriting of the placing of shares by Taylor Nelson Sofres plc to raise $51 million for its acquisition of NFO WorldGroup from The Interpublic Group for $425 million in 2003; 
• advising Suez on the sale of its 10.8% interest in Fortis and related issue of €1.19 billion mandatorily exchangeable notes due 2006 exchangeable into shares in Fortis;  
• advising Granada Media in the £7.5 billion demerger of Granada Media from Granada Compass plc, involving the £7.5 billion flotation of Granada Media, the largest UK IPO on the London Stock Exchange in 2000;   
• advising Goldman Sachs International in its capacity as sponsor and underwriter of the £1.3 billion IPO and listing of Egg plc on the London Stock Exchange; 
• advising Wellington Underwriting plc on its relisting on the London Stock Exchange in 1996, its rights issue in 1998, equity placing in 2001 and equity capital raisings (including to certain US accredited investors) in 2002.