September 15, 2017 / 10:56 AM / a year ago

Stada finally out with high-yield bonds

LONDON, Sept 15 (IFR) - The bond portion of Stada’s jumbo buyout financing backing its takeover by Bain Capital and Cinven finally hit screens on Friday morning.

The German generic drugmaker is looking to raise €825m in total through a €485m 7NC3 senior secured and a €340m 8NC3 senior unsecured tranche, in line with earlier forecasts.

The deal has been long-expected, though those hoping it will redress the supply/demand imbalance in the market are likely to be disappointed.

“I think there’s cash out there, so all right, that’s big enough for now, but what happens after a month where there’s limited issuance, you’re clipping coupons and you’ve got cash inflows?” said a banker.

“I feel like the cash balances get replenished fairly quickly and you’re not seeing a whole lot of money come out of the asset class.”

The company is holding management conference calls from Friday, followed by a European roadshow running September 18-20.

Citigroup and JP Morgan are global coordinators, with Barclays, Commerzbank, Deutsche Bank, ING, Jefferies, Nomura, Societe Generale, UBS as bookrunners and MUFG as co-manager.

On the loan side of the financing, Stada is looking to raise €2.35bn through two first-lien term loans: a €1.65bn and €300m-equivalent in sterling.

The euro portion is guided to pay 350bp-375bp over Euribor, while the sterling is 100bp wider at 450bp-475bp over Libor.

There is also a €400m six-year revolving credit facility at 325bp over Euribor/Libor.

Investors have been asked to commit to the deal by September 21.

Barclays, Nomura and UBS are leading the loan portion of the financing.

LBOs are leading to more supply in the market than earlier in the year, with the latest from MCS and Avantor.

French debt collector MCS raised €270m through a 7NC3 senior secured on Thursday, part of which backs its acquisition by BC Partners.

US life sciences company Avantor is out with US$4.25bn-equivalent of bonds backing its take-private of lab supplies company VWR, which includes a €500m 7NC3 senior secured tranche.

But bankers say the pace of LBO issuance is unsustainable.

“In the long-run, the level of (LBO) supply is normal, but we’ve been undersupplied of LBO and M&A-driven activity this year. What we’re seeing at the moment represents an increase in those kinds of deals,” said a second banker.

“Unfortunately, I don’t expect it to be sustained at this level for the rest of the year.” (Reporting by Yoruk Bahceli, editing by Sudip Roy and Julian Baker)

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