Carlyle, FountainVest to Hold Focus Media Stakes after Deal

HONG KONG--Carlyle Group LP and China-focused private-equity firm FountainVest Partners are set to be the two biggest shareholders in Focus Media Holding Ltd. after the advertising company's chairman, people with knowledge of his plan to take the Nasdaq-listed company private said.

Shareholders of the Chinese company, which has commercial screens in elevators and other public areas across China, approved Focus Media Chairman Jason Jiang's plan to take it private with private equity help last month. Focus Media announced in August that Mr. Jiang along with private-equity firms Carlyle, FountainVest, Citic Capital Partners and China Everbright Ltd., would delist the firm.

The buyout, China's biggest ever leverged-buyout, had been one of the few major deals by private-equity firms in China and the deal valued the company at US$3.7 billion.

Carlyle and FountainVest will own 19.7% each once the company is delisted, while Citic Capital will hold 9.8% and China Everbright will have 2.2%, according to people familiar with the situation.

Mr. Jiang will own 30.9% after the deal, existing shareholder Fosun International Ltd. will own 17.4%, and senior management of the company will have 0.3%, the people said.

Plenty of banks have also piled in to help fund the buyout of the company, which in November 2011 was hit by allegations by short-seller Muddy Waters that it was overstating the number of liquid-crystal-display screens it uses to display advertisements in China. Its shares have since recovered to their levels before that.

A consortium led by Mr. Jiang got a US$1.53 billion loan in December from nine banks--China Development Bank, China Minsheng Banking Corp., Industrial & Commercial Bank of China Ltd., Bank of America Corp., Citigroup Inc., Credit Suisse AG, DBS Bank Ltd., Deutsche Bank AG and UBS AG.

In February, the nine banks started syndicating US$1.075 billion of the loan as a five-year loan to share the risk, but they don't plan to sell the remaining US$450 million one-year bridge loan, people familiar with the situation said earlier.

The five-year loan drew an additional nine banks, ranging from European to Taiwanese to Chinese lenders. Bank of Taiwan and Taishin International Bank Co. each took US$42.5 million, while China Citic Bank Corp., Hang Seng Bank Ltd., Mega International Commercial Bank each committed US$40 million.

China Development Industrial Bank joined in for US$35 million, while Bank of East Asia Ltd., BNP Paribas SA and China Trust Commercial Bank each took US$30 million.

Of the original nine lenders, CDB took US$200 million, China Minsheng took US$175 million, ICBC took US$100 million, and the remaining six took US$45 million each.

The interest rate of loan is 5.25 percentage points over the London interbank offered rate, or Libor. The yield for the loan is about 6% similar level with other LBO deals in the region such as leveraged buyout of Australia's Spotless Group Ltd., a cleaning and catering contractor, offered a yield of 5.5% last year.

The consortium led by Mr. Jiang is offering US$27.50 for each American depositary share, and US$5.50 for each ordinary share.

The company said last month it expects to be in private hands in May.

Write to Prudence Ho at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires