By Freya Berry and Claire Ruckin
LONDON (Reuters) - Australian infrastructure investor Macquarie (AX:MQG) has tapped Citi (N:C) to work on a potential sale of service station provider Moto in a deal that could be worth more than 1.1 billion pounds, three sources familiar with the matter said on Thursday.
Moto, Britain's largest motorway services company, had 2014 core earnings (EBITDA) of around 91 million pounds. The asset could appeal to both private equity groups and infrastructure funds.
UK peer Roadchef was sold in a 153 million pound deal last year. That sale valued the business at around 12.5 times its earnings, one of the sources said. A similar valuation would put Moto at about 1.1 billion pounds.
Citi and Macquarie declined to comment.
Macquarie's infrastructure arm purchased Moto from UK firm Compass as part of a consortium of investors in 2006. Compass also sold Upper Crust owner SSP (L:SSPG) at the same time. The travel food business was listed on the London Stock Exchange last year.
Moto, which hosts companies such as Burger King [BKCBK.UL], Costa and WH Smith (L:SMWH), has 45 locations across the UK and around 6,000 staff. It had turnover of 803.4 million pounds in 2014.
The firm raised a 445 million pound loan in March 2015 in conjunction with a 175 million pound high yield bond, to refinance existing debt, according to Thomson Reuters LPC data.
The loan, which comprises a 385 million pound term loan B, 50 million pound capital expenditure facility and 10 million pound revolving credit, was provided by Commerzbank (XETRA:CBKG), Credit Agricole (PARIS:CAGR), Deutsche Bank (XETRA:DBKGn), ING, Investec, Lloyds (LONDON:LLOY), Scotia and Societe Generale (PARIS:SOGN).
The infrastructure-styled refinancing came with portability which means debt can remain in place under new ownership, one of the sources said.
Usually when a business is sold, it triggers a change of control provision, which requires any existing debt to be repaid. The ability to keep debt in place is likely to be attractive to potential buyers, unburdened with finding a debt financing to back any acquisition.
Service station assets can appeal both to buyout firms and to infrastructure funds, who are attracted by their relatively stable, cash-generative nature.
Roadchef was snapped up by European fund Antin Infrastrcutre partners in September last year.
And Guy Hands' buyout house Terra Firma (TERA.UL) this year put German motorway service station Tank & Rast up for sale, hoping for a valuation of up to 15 times core earnings, in a deal potentially worth between 3 and 3.5 billion euros ($3.83 billion).
First round bids for the asset have just gone in, with investors including Allianz (XETRA:ALVG), ADIA and PSP all expected to show interest.
($1 = 0.6547 pounds)