The crisis in global debt markets looked close to claiming another high-profile scalp yesterday, amid fears that Cadbury Schweppes could be forced to delay or even abandon the multi-billion-pound sale of its US drinks arm.

Final-round bids for the business, which includes Dr Pepper, Snapple and 7-Up, are due in early next week. Cadbury had hoped to announce a preferred bidder at the group’s interim results next Wednesday.

But the sale, which is being handled by Morgan Stanley, Goldman Sachs and UBS, could run into trouble after the banks were forced to lower the amount of debt – called staple financing – available for the deal.

It is understood that the banks had originally agreed to lend on a multiple of 9.5 times Cadbury’s earnings before interest, tax, depreciation and amortisation. But as jitters over the collapse of the US sub-prime mortgage sector have spread to the leveraged loan market, the banks have been forced to decrease that multiple to 8.5 times, to ensure they can syndicate the debt to investors after the deal is completed.

“The bottom line is the structure that we had before wouldn’t have worked,” one source said last night.

The news comes as Kohlberg Kravis Roberts was yesterday forced to agree to make higher interest payments on the junior portion of the £9 billion debt package behind its acquisition of Alliance Boots.

After days of negotiations, it is understood that the banks that underwrote the deal – Deutsche Bank, JP-Morgan and Unicredit – have agreed to syndicate just the junior portions of the debt, collectively worth £1.75 billion. The banks will have to hold the remaining £7.25 billion on their books in the hopes they will be able to syndicate it once the market settles.

Cadbury and Alliance Boots are the latest victims of the fallout from the US sub-prime market, which has caused dozens of deals to be postponed or cancelled altogether.

The price tag for the Cadbury business is now believed to have dropped by as much as £1 billion – from initial estimates of £8 billion-plus to closer to £7 billion. Although it is still technically feasible for Cadbury to seal a deal, the original timetable now looks increasingly farfetched.

It is now unclear whether or not a sale to a private equity bidder can be achieved at a price that will satisfy shareholders. Two consortiums have been cited as the main contenders to buy the drinks operation.

The first includes Bain Capital Partners, Thomas H Lee Partners and Texas Pacific Group. A second involves Blackstone, Kohlberg Kravis Roberts and Lion Capital.

It is thought that Cadbury is still considering the possibility of a demerger or IPO as a back-up plan if it cannot attract a sufficiently high price for the business.

Cadbury Schweppes declined to comment last night.

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