LONDON Feb 19 The sale of a minority stake in
French veterinary pharmaceutical firm Ceva Santé Animale will be
financed with a leveraged loan of more than 1 billion euros
($1.38 billion), banking sources said on Wednesday.
The loan will test the market as the first 'covenant-lite'
loan for a European company. Covenant-lite loans do not have
traditional maintenance covenants that protect investors.
The loan also has aggressive total leverage levels of seven
times Earnings Before Interest, Tax, Depreciation and
Amortisation (EBITDA). Senior leverage is expected to be
5.25-5.5 times, several bankers said.
Ceva is the ninth-largest animal health group globally and
has attracted interest from several private equity firms which
are expected to submit bids of up to 1.5 billion euros in late
Banks are eager to finance new buyouts after low levels of
M&A activity in 2013. Credit Agricole, Goldman Sachs, Natixis
and Nomura have agreed to underwrite the loan, the bankers said.
The deal includes a 700 million euro term loan B; a 50
million euro revolving credit facility; and a 100 million euro
capital expenditure facility, the bankers said.
A shareholder Payment-In-Kind (PIK) loan of around 200
million euros is also included which has been preplaced with a
mezzanine fund of Ardian (formerly Axa Private Equity).
The loan will also have a 'double luxco' structure, which
allows senior lenders to enforce security without going through
French courts to avoid a potentially lengthy restructuring if
the company defaults, the bankers said.
Ceva Sante and Ardian were not immediately available to
Ceva was originally part of Sanofi-Aventis, which
sold the company in 1999 to PAI Partners, which sold it in turn
in 2003 to Sweden's Industri Kapital.
Management and employees bought a majority stake in 2007 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, pigs and poultry.
($1 = 0.7272 euros)
(Editing by Tessa Walsh)