The bond will refinance a 300 million pound revolving credit facility agreed in July, a spokesman for Kingfisher said on November 02.
The company said earlier this year the credit facility was agreed after the acquisition of China's OBI Asia Holding, and was also set up in anticipation of an additional contribution to its UK pension fund in the second half of the year. The benchmark-sized bond - meaning it will total a minimum of 500 million euros ($600 million) - will have a maturity of 7 to 10 years, an official at one of the lead managers said.
A roadshow for the new issue, which is being managed by BNP Paribas, Royal Bank of Scotland and Societe Generale, will run from November 8 to November 11, with pricing expected the following week, the official said. The deal will be Kingfisher's first foray into European bond markets since October 2003, when it sold sterling and euro-denominated bonds.
The new bond will have "change of control" covenants, allowing investors to sell the bond back at face value if a take-over prompts a downgrade to "junk", the bank official said.
Earlier this year, rumours of a debt-heavy leveraged buyout by private equity groups led to a spike in credit default swaps on Kingfisher. CDS insure a company's debt against default.
Kingfisher is rated Baa1 by Moody's Investors Service and BBB+ by both Standard & Poor's and Fitch Ratings. After its results, Moody's warned it might cut its rating, citing Kingfisher's weak trading, and a costly restructuring programme at the company's B&Q division.