Thomson’s €500 million perpetual non-call 10-year is the first hybrid deal to offer investors leveraged buyout protection in the form of change-of-control covenants. Buyers of corporate hybrid capital risk substantial capital loss in the event of sudden, substantial credit events and persistent rumours of an LBO have surrounded the French company.
Bookrunners Barclays Capital, Citigroup, Deutsche Bank and SG inserted language stating that if the credit (rated Baa3/BBB–) is downgraded to junk following a takeover, the company will either redeem the bonds or pay investors 500 basis points extra.
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