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Reed Elsevier, the UK-listed publisher, has delayed the posting of the information memorandum on its Reed Business Information (RBI) division because it is still finalising its financing package, sources close to the situation told dealReporter.

Reed Elsevier wants to offer staple finance to prospective buyers, and so far, JPMorgan is at the most advanced stages of putting financing together, one source said. While a formal financing mandate has yet to be granted, the banks that have expressed interest are understood to include Lloyds TSB, JPMorgan, UBS, BNP Paribas and Bank of Ireland. GE is understood to also be interested but needs to sell some of the debt it provided on the sale of Emap before it can provide any financing on Reed Business.

Another source close to the situation said that there is ”an irrational fear of a downturn in advertising revenues,” and there is a lot of advertising in the group. The source added, however, that Reed is still an attractive deal with senior leverage unlikely to be more than 3x EBITDA. Those low leverage levels should be enough to encourage bidders against a possible downturn in the economy, specifically advertising revenues, the source added.

While Reed Elsevier is hoping to encourage a sale of the whole of RBI by offering a financing package to prospective buyers, it is also offering financing packages for parts of the business, one source said. The source said he thought that Reed would ultimately still sell the business as a whole despite marketing a sale of parts in tandem. This way, mid-sized players would also be in the process to drive up the end price for the asset, the source explained. PWC is conducting the due diligence, a lengthy process given that RBI has multiple businesses in many geographies, the source pointed out.

A Reed Elsevier spokesperson said that RBI does have exposure to online advertising everywhere, but these are B-to-B businesses which are slightly better than consumer ones. The spokesperson said that Reed had 30% of its revenues from online advertising last year but that online is more resistant to possible downturns than print. The spokesperson added that the nature of the disposal will hinge on whatever is the best return to shareholders, regardless of bids being offered for parts or the whole. The spokesperson declined to comment on the delay of the IM. Reed Business Information, is thought to be worth around GBP 1.25bn.

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