Biogroup LCD launches €1B of secured and unsecured bonds

Biogroup LCD is making its debut in the European high-yield bond market with a new €1 billion offering of secured and unsecured notes via a J.P. Morgan-led bank group. The notes will be used alongside a new term loan to refinance the company's capital structure.

The new transaction comprises:

* €750 million of seven-year (non-call three) senior secured notes, with initial price thoughts of mid-to-high 3% (yield). The issuing entity is CAB, and leads are guiding investors to expect ratings of B-/B2/B+.

* A €250 million tranche of eight-year (non-call three) senior notes, with IPTs of mid-5%. These notes are to be issued by Laboratoire Eimer, and expected ratings are CCC/Caa1/CCC+.

A lender call was held today at 10 a.m. London time. J.P. Morgan (B&D) is the sole physical bookrunner on the deal and is also a global coordinator and joint bookrunner alongside BNP Paribas and Natixis. Citi, Credit Agricole CIB, Deutsche Bank, Goldman Sachs and HSBC are joint bookrunners.

On Jan. 20, Biogroup launched a seven-year term loan sized at €1.40 billion to €1.65 billion, and talked at E+375-400 with a 0% floor, offered at 99.75. Guidance suggests a yield to maturity of 3.85%-4.11%. Proceeds from the bonds and new loan, together with around €79.9 million of cash from the balance sheet, will be used to take out Biogroup's €2.015 billion first-lien term loan in full, as well as some €304.5 million of second-lien and €218.2 million of PIK notes.

The company was last seen in the leveraged loan market in August 2020, when it placed a €536 million term loan due April 2026 at E+475 with a 0% floor to support an acquisition. From allocations of 96, that deal was quoted in secondary in a rough 100.250/100.875 market by mid-January, before moving toward par on the bid following the refinancing news.

Biogroup also has a €274.7 million term loan B due April 2026 (E+425), as well as a roughly €1.2 billion term loan B due April 2026 (E+375) that was quoted around 99.750/100.375 in the secondary market before news of the refinancing. Last year's deal in August also came with roughly €118 million of second-lien debt, according to a report from S&P Global Ratings.

The company is a France-based independent laboratory group operating testing services across 742 sites across France and Flanders. In the 12 months to the end of September, the company reported pro forma adjusted EBITDA of €454.4 million, with a net debt to pro forma adjusted EBITDA ratio of 5.1x and EBITDA margin of 33.4%. Leverage rises to 6x when using a pro forma adjusted EBITDA figure (excluding the impact of COVID-19) of €386.2 million.

The company's EBITDA for the 10 months ended Oct. 31, 2020, increased to €339.3 million, from €149.2 million in the same period in 2019, with the company citing recent acquisitions and the increase in testing volumes due to the COVID-19 pandemic. Biogroup has been granted the status of critical national infrastructure in France and Belgium, and so it has been allowed to remain fully operational throughout periods of lockdown.

The notes are portable as long as the consolidated net leverage ratio remains less than 6.75x. Up to 10% of the senior secured notes may be redeemed per year during the non-call period at a redemption price of 103.