Brookfield Asset Management (BAM.US) is seeking to raise around €10bn in financing to privatize Grifols
According to an informed source, Brookfield Asset Management (BAM.US) is seeking up to $9.5bn (€6.6bn) in debt financing for a potential buyout of Spanish pharma company Grifols SA.
This buyout would trigger a covenant that allows bondholders to demand that the company repay debt at a premium above par — far above the current trading price of some bonds.
Shares of Grifols rose as much as 6.1 per cent in Madrid to €9.38 after the financing news.
BAM and the Grifols family agreed last month to consider a takeover plan for the blood plasma company, which is worth about €5.5bn and has been struggling to recover from a short-seller attack in January.
Gotham City Research’s attack on Grifols sent its shares and bonds tumbling, and a series of bad news, including accounting adjustments and cash flow adjustments, exacerbated the volatility in the months that followed. The company appointed new management to calm investors.
The debt package for a Grifols family and BAM buyout could include €8bn of drawn debt and up to €1.5bn of revolving credit, according to an informed source.
One of the sources said most of the financing would be in US dollars. Another said one bank has indicated it would underwrite the entire amount.
After years of debt deal doldrums, banks are keen to underwrite large debt packages, encouraged by the market’s belief that interest rates have peaked.
BAM can offer Grifols only a limited amount of new debt. The company’s leverage has been under scrutiny and its credit ratings have been downgraded by three agencies since March.