So far, bids for Subway have ranged between $8.5 billion and $10 billion, one of the sources said. Subway's financial adviser, JPMorgan Chase & Co
The debt financing is based on a mix of loans and bonds and its size is equivalent to 6.75 times Subway's 12-month earnings before interest, taxes, depreciation and amortization of about $750 million, the sources added. WBS financing requires store-by-store due diligence by ratings agencies which can take more than a year. Bidders would have to rely on JPMorgan's debt package or arrange their own financing to clinch a deal with Subway, and then refinance through a WBS scheme down the line, the sources said., a major player in the market for WBS financing, is one of the banks in discussions about long-term financing, the sources said.
JPMorgan's financing package also offers the option of a preferred equity component with a roughly 15% interest rate, the sources said. This is a more expensive route that private equity firms may not opt for, three of the sources added.