Lovells takes on £350m bond offering for brewer.

Lovells has scooped one of its biggest capital markets transactions of the year for longstanding corporate client South African Breweries (SAB).
The firm has acted for the company since its £3.4bn listing on the London Stock Exchange (LSE) in March 1999, and has now advised it on the launch of a $500m (£352m) convertible bond offering.
The bonds are being issued by SAB’s wholly-owned subsidiary SAB Finance in the Cayman Islands and are guaranteed by SAB and SAB International.
They are ultimately convertible into ordinary SAB shares, which at SAB’s discretion will be either newly issued SAB shares or existing SAB shares held within ‘Safari’, which is a synthetic treasury stock structure that was set up in 1999.
SAB relationship partner John Davidson in the corporate finance department led the Lovells team, along with capital markets partner Laurence Garside. The firm also pulled in securities partner Robert Ripin from its New York office and finance partner Jan de Snaijer from the Amsterdam office.
The team is making applications for the bonds to be listed on the official list and admitted to trading on the LSE, and closure is expected to be on 10 August.
Davidson said: “What made this interesting for SAB is that there’s an option of issuing new shares, or we have these shares held in our synthetic treasury stock programme, so we have a bit more flexibility. That was set up with shareholder approval in 1999 and is pretty unique.”
The sole bookrunner and lead manager JP Morgan and the joint lead manager Cazenove & Co were both advised by Linklaters & Alliance. Partners Nick Eastwell and Charles Howarth led the team there.
The issue has not been made to fund a specific acquisition. “There’s nothing in particular in terms of specific acquisitions, but they’ve been fairly acquisitive as a company,” said Davidson. “They plan to use the money to refinance those existing acquisitions and as a war chest for the future.”
Lovells advised the client earlier this year in setting up its strategic alliance with Castel Group, announced in February.
The firm’s capital markets practice has traditionally been issuer-based, although in the last few years it has tried to develop relationships with the investment banks. The team’s biggest underwriter clients are now JP Morgan, which it advised on the BHP Billiton merger, Credit Suisse First Boston and WestLB.