LONDON Dec 12 Bankers are preparing leveraged debt financing of up to 700 million euros ($962.7 million) for the planned sale of a minority stake in veterinary pharmaceutical firm Ceva Santé Animale next year, banking sources said on Thursday.
Ceva's CEO stated previously that the current ownership structure will end between mid-2014 and mid-2015. The sources said Ceva was in the early stages of preparing for a sale, which is expected to be formally launched in the first quarter of 2014.
The sale could attract a number of private equity firms following a dearth of M&A opportunities this year.
A number of bankers are pitching debt financing packages to management, bolstering confidence that debt will be available to back a buyout, the sources said.
Ceva, the ninth-largest animal health group globally, is seen as a strong performer. Its debt amounts to around triple its earnings, down from 7.3 times in 2007, according to Thomson Reuters LPC data and one of the sources.
Bankers are working on debt packages of 600 million to 700 million euros, roughly equivalent to six to seven times Ceva's earnings before interest, tax, depreciation and amortisation (EBITDA), which exceed 100 million euros, the sources said.
The financing is expected to be covenant-lite, which could make it the first pure European covenant-lite deal. Momentum is growing for this financing structure in the leveraged loan market, where liquidity is strong and demand outweighs supply.
Ceva was originally part of Sanofi-Aventis, which sold it in 1999 to PAI Partners, which in turn sold it in 2003 to Sweden's Industri Kapital.
In 2007 management and employees acquired a majority stake, and Euromezzanine and Natixis took a minority stake, backed with 433 million euros of loans, according to Thomson Reuters LPC data. Sagard joined as a minority shareholder in 2010.
Ceva focuses on the research, development, production and marketing of pharmaceutical products and vaccines for pets, livestock, swine and poultry, according to its website. ($1 = 0.7271 euros) (editing by Jane Baird)