- 5 - a tight timetable to complete their financing before competing bidders could. The Lease One portion of the LBO financing was both a capital contribution and asset financing from a sale-leaseback entity called Corporate Property Associates 7 (CPA7). In this LBO financing arrangement, CPA7 agreed to purchase the bottling facilities Bottlers used to bottle its products (located in seven locations in three States) and lease them to Bottlers on terms favorable to CPA7. The lease had a 25-year term and contained significant rent escalators. As a result, the lease offered a premium to CPA7 because it would eventually rent at premium or above-market rates as the rent escalated. Because of the onerous lease provisions, the management group knew Bottlers eventually had to renegotiate or buy out the lease to avoid the rent escalators. Six years after the LBO, the management group was considering buying the bottling facilities from CPA7 to avoid further rent escalators, but the prospect of Bottlers owning the bottling facilities posed three problems. First, the management group wanted Bottlers to be salable to Coke or Pepsi. Neither Coke nor Pepsi, however, would buy Bottlers if it owned bottling facilities because Coke and Pepsi already had bottling facilities.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011