LONDON (Reuters) - The euro-denominated portion of the leveraged loan backing private equity-backed life sciences company Avantor’s buyout of lab supplies company VWR Corp has doubled to €1bn at the expense of the dollar loan, banking sources said.
In addition, the discount has deepened across the board and soft-call protection has increased as the deadline for commitments draws near.
The financing now comprises a €1bn loan, increased from €500m at launch, and a US$1.802bn loan, reduced from US$2.401bn at launch.
The discount on both loans has widened to 98-98.5 OID, from 99 OID at launch and 101 soft-call increased to 12 months, from six months previously.
Margins remain the same at 425bp over Euribor with a 0% floor on the euros, and 400bp over Libor with a 1% floor on the dollars.
“It was virtually a brand new name in Europe so maybe the view at first was to keep it to a certain amount and upsize if the demand was there. The demand from Europe was there and as a business it has sufficient euro cashflows to support the increase,” a banker said.
“Although the dollars was reduced, it was still reduced to a massive amount. The deeper discount is just to get it away as there is a lot to raise.”
Goldman Sachs is leading the financing with Barclays, JP Morgan and Jefferies and lenders have been asked to commit to the loan financing by September 20 at 12pm EST and 5pm UK time.
Avantor on Tuesday also raised the yield on a US$4.25bn-equivalent junk bond sale, according to IFR.
Price talk of 8.75%-9% was set on the riskiest portion of the financing - a US$2.25bn senior unsecured note maturing in 2025. That was some 150bp above the low to mid 7%s level at which the company began sounding out investor appetite for the trade two week ago.
Price talk on a US$1.4bn senior secured seven-year tranche was set at 5.75%-6% from whispers of low to mid 5%, while a €500m seven-year tranche is now marketed at 4.75%-5% from low to mid 4%s initially.
Avantor is backed by New Mountain Capital, which announced the US$4.38bn acquisition of VWR on May 5. The newly merged laboratory equipment giant will sell products ranging from beakers to microscopes to clients within the healthcare and technology industries.
The corporate rating is B3/B/B while the loans are rated B2/B/BB.
Editing by Christopher Mangham