LONDON, June 17 Advent International is seeking to take an 80 million euro ($108.92 million) dividend from its Dutch medical supplier Mediq and rejig existing debt to make it more attractive, banking sources said on Tuesday.
Advent took Mediq private in 2013 backed with a 740 million euro leveraged loan financing and took a 230 million euro dividend at the end of last year after raising extra debt and selling its Polish business.
It has now hired Deutsche Bank to arrange a further dividend, reprice existing debt and remove some financial covenants, the banking sources said.
A lack of M&A has prompted borrowers to revisit portfolio companies and push for more aggressive terms, which investors are accepting in a bid to keep invested in deals. Other borrowers to recently request a dividend include Luxembourg-based satellite TV business M7 and French call centre business Webhelp.
"In the absence of new money deals, sponsors are going back to the drawing board and revisiting portfolio companies to see if they can improve borrowings," one of the banking sources said.
Mediq will use cash on balance sheet to pay the dividend. Taking a dividend will increase leverage to 4 times earnings, taking it back up to the level when Advent bought the business. Leverage is currently around 3.5 times, the banking sources said.
"Mediq is a very cash generative business with very little capital expenditure so every bit of profit turns into cash," a second banking source said.
At the same time Mediq is seeking to shave 50 basis points (bps) off interest margins so a term loan A, revolving credit and capital expenditure facility will pay 375bps from 425bps and a term loan B will pay 400bps from 450bps, the banking sources said.
This is the second time Mediq has repriced debt after reducing margins at the end of last year by 50bps, according to Thomson Reuters LPC.
Mediq is also seeking to remove two covenants to become "covenant-loose", lessening the series of financial tests it needs to comply with in regards to its borrowings and reducing protections for lenders, the banking sources said.
Advent bought Mediq with a significant equity cheque and still has around 250 million euros of cash equity in the deal. Mediq's EBITDA totals around 159 million euros, the banking sources said.
Lenders to Mediq are considering the deal and commitments are due June 25.
Advent was not immediately available to comment. ($1 = 0.7345 Euros) (Editing by Christopher Mangham)