(Bloomberg) -- Hedge funds Elliott Investment Management LP and Sona Asset Management Ltd. are among the firms that scooped up junk debt underpinning the buyout of Unilever PLC’s tea business at a discount.

Lenders sold the entire €1.5 billion ($1.58 billion) at 82 cents on the euro, according to people close to the matter who asked not to be identified because the talks are private. The debt for CVC’s buyout of the business known as Ekaterra is one of the most high-profile European loans weighing on banks’ balance sheets this year after markets turned.

With a discount that large, the banks take a hit, but the deal relieves some of the pressure on their finances. It also chips away at the billions of dollars of risky debt backing leveraged buyouts that lenders struggled to sell this year, having committed to them before the markets were roiled by higher interest rates, geopolitical uncertainty and recession fears.

Elliott and Sona were among the bigger buyers, but the sale also attracted King Street Capital Management LP, as well as other investment firms, the people said.

Sona, Elliott and King Street declined to comment.

The deal comes during a year-end window of opportunity that’s enabling banks to sell down a portion of their hung debt. Apollo Global Management Inc. and Franklin Templeton are among investors that bought $750 million of debt backing the buyout of Citrix Systems Inc, at 87 cents on the dollar.

The €1.5 billion loan for Ekaterra was part of a total debt package equivalent to €2.5 billion. The latest sale rids banks of the majority of the financing, leaving only about €100 million of sterling-denominated debt remaining on the books, the people said.  

This summer, the banks on the deal — including Goldman Sachs Group Inc., Barclays Plc, Bank of America Corp., Citigroup Inc. and Deutsche Bank AG — sold most of a €500 million, sterling-denominated tranche backing the buyout. The financing also comprised a smaller, subordinated loan that was sold to investors.

Unilever completed the $4.7 billion sale of its tea business, which includes UK household names PG Tips and Lipton, to CVC in July, after agreeing to the acquisition in November last year. The company is also said to be weighing the sale of a portfolio of US ice cream brands that could be valued at as much as $3 billion. 

Citi, Deutsche Bank, Bank of America and CVC declined to comment, while spokespeople for the other banks and Ekaterra didn’t immediately respond to a request for comment.

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