LONDON Feb 28 A €1.1bn leveraged financing
backing a buyout of European medical laboratory services
operator Cerba is being shown to earlybird investors in a bid to
gage appetite for the deal, banking sources said on Tuesday.
JP Morgan, Natixis, Credit Suisse, Deutsche Bank and BNP
Paribas are leading the debt financing, which is currently split
between a leveraged loan and a high-yield bond.
Underwriting lenders are trying to work out how much
liquidity is in each market for the deal before launching to
general syndication at a bank meeting next week, the sources
The financing has been structured to comprise around €550m
of senior leveraged loans, guided at around 375bp over Euribor;
€250m of senior secured bonds; and around €180m of subordinated
bonds, the sources said.
However, the structure is fluid and the likelihood is that
the bonds could be scrapped altogether.
Lenders are launching jumbo leveraged deals to both bond and
loan investors, with the intention of dropping the bond portion
of a deal if they generate enough loan support, at the right
Germany-based building materials maker Xella raised a
€1.45bn covenant-lite term loan B earlier this month, which was
increased twice during syndication from an initial target of
€1.15bn, after ditching plans to raise a high yield bond.
Competitive tension between the two markets has been used as
a syndication strategy for years but the difference now is that
an all-loan structure is the end target before a deal has even
launched. Historically there wasn’t the same visibility on the
final composition, the sources said.
Loans are generally more flexible as they don’t have call
protection, so an owner can prepay them and reprice them.
“The banks are showing that the bond market is a threat but
the bonds are likely to disappear. The bond market is gradually
waking up to the fact they are the stalking horse to keep
pricing tension,” an investor said.
Partners Group and PSP Investments agreed to acquire
European medical laboratory services operator Cerba from PAI
Partners, the companies announced in January.
Cerba employs almost 4,300 people, including 350 biologists
and generated revenues of approximately €630m in 2016.
(Editing by Christopher Mangham)