(Bloomberg) -- HomeServe is in early discussions with lenders for an asset-backed transaction that would pay owner Brookfield Asset Management Ltd. a dividend of $600 million, according to people with knowledge of the matter.
The emergency household-repairs provider is offering $1.8 billion of bonds backed by its assets through a whole-business securitization led by Jefferies Financial Group Inc., the people said, asking not to be identified discussing a private transaction.
Proceeds will be used to refinance existing debt and pay the dividend to its owner, the people added. Brookfield acquired the company in 2023.
Representatives for Brookfield and Jefferies declined to comment, and a representative for HomeServe didn't respond to requests for comment.
Whole-business securitizations allow companies to raise capital at relatively better rates compared to other sources since they typically pledge all or most of their assets as collateral. Companies that have tapped this niche corner of the structured finance market include chicken finger restaurant chain Zaxby's and sandwich chain Subway.
HomeServe's transaction is expected to consist of multiple tranches spread out across both the public and private structured finance markets, the people said.
The company is considering a five-year tranche that would be publicly tradeable, the people said. Pricing for that portion is being discussed in the range of the upper end of 1 percentage point to the lower end of 2 percentage points over the benchmark Treasury rate, they added.
It also plans to offer two tranches in a more private format. That includes a seven-year segment that's being discussed in the mid-2 percentage point range over the benchmark, and a 10-year tranche in the upper-2 percentage point range over the benchmark, the people said.
Pricing discussions are early and details could change, while the size of each tranche is still being determined, they added. The transaction is expected to wrap up in September.
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