KPMG Corporate Finance yesterday announced that a successful financing close had been secured for the acquisition of Courts Plc's Caribbean operations. Courts in the Caribbean is a retailer of consumer electronics, appliances and furniture, which it sells primarily on credit through 93 retail stores in 12 countries.

The acquisition of the Courts Caribbean business is being undertaken by Cobalt Holdings, a subsidiary of a Central American retailing group in the same business with operations spanning Central America, the US and the Dominican Republic. The group is owned by the Siman family of El Salvador along with a partner, Actis, formerly CDC. It is one of the largest leveraged buyouts ever undertaken in the region, covering 12 countries including Jamaica, Barbados, Trinidad, various Eastern Caribbean countries
and Bermuda.

According to Simon Townend of KPMG Corporate Finance, based in The Bahamas, who led KPMG's regional advisory team: "This transaction is a landmark transaction in many ways, not just due to the significant price tag by regional standards, but also due to its complexity. It covers operations in 12 countries, and was financed in 7 local currencies in order to reduce currency risk protection to the buyer. The capital structure of the acquisition vehicle has 5 layers of capital.

"Two of the country operations are housed in listed companies (Barbados and Jamaica), and public tenders were required under take-over rules, which we closed successfully two days ago."

Townend also noted the sale of Courts Caribbean operations were part of a larger series of transactions and that the successful conclusion of this transaction would result in a significant recovery for bank creditors in the UK.

The financing for the transaction was very complex, and quite unique in the Caribbean to date. Frederick Morris, a director of KPMG Corporate Finance, added: "Structuring the financing for this transaction took an enormous effort. The senior debt was co-arranged by Scotia Capital and RBTT, Trinidad. A second lien tier of debt and a Payment-In-Kind (PIK) note is being financed by Citigroup. The security package spans all 12 countries."

Raymond Campbell, head of Financial Advisory Services for KPMG's Caricom practices based in Jamaica, Barbados, Trinidad & Tobago and the Eastern Caribbean, noted: "KPMG has demonstrated the ability to effectively leverage our regional network of corporate finance, transaction services and tax advisory resources throughout Caricom with KPMG's broader regional and global expertise."

Campbell added that "KPMG member firms were investing in the development of their financial advisory services within Caricom so as to continue assisting businesses in achieving their regional strategy. Our professionals from across the region have made all of us extremely proud in their ability to deliver on our brand promise of outstanding professionals working together to deliver value."

Commenting on the transaction Raphael Gordon, managing partner of KPMG in Jamaica and chairman of KPMG Caricom, noted that "there was fierce competition for the assets of Courts Caribbean and we were able to utilise our deep knowledge of the local markets to successfully advise the client through the first and second round bidding process where Cobalt emerged as the leader and obtained the status of preferred bidder."

Courts Plc was placed in administration in late 2004 and has been in the process of selling its operations in various regions including its operations in the Caribbean.

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