Rekeep slashes pricing on €350M bond offering to 7.25%

Italy-based facility management services group Rekeep SpA has slashed pricing on its €350 million offering of five-year (non-call two) secured notes to a final yield of 7.25%, from guidance of 7.75% and initial price thoughts in the 8% area. Pricing will take place later today. J.P. Morgan (B&D) and UniCredit are joint global coordinators and joint physical bookrunners alongside joint bookrunners Goldman Sachs and Credit Suisse.

Clearly given the price action, investor demand has been strong. This is in part a reflection of accounts chasing yield, with many accounts admitting they need to increase credit risk to try to generate excess returns. Moreover, Rekeep is deemed to be a fairly good business with decent free cash flow generation, good market position, growing exposure to the healthcare sector, and a solid pipeline of contract. The concerns have not changed in years though, as the company is still dogged by litigation from a case that began years ago, while it is often chastised by fund managers over its reporting and communication.

Proceeds from the deal will refinance debt, including the roughly €334 million of 9% secured notes due 2022 issued through CMF in June 2017 and €50 million of drawings from the company's revolver. Rekeep will also use €50 million of cash from its balance sheet for the refinancing. The notes to be refinanced closed at 103 on Jan. 15 to give a yield of 5.547%, according to data from S&P Global Market Intelligence.

Rekeep was formerly known as Manutencoop and provides facility management services alongside laundering and sterilization services. For the 12 months ended Sept. 30, 2020, the company reported a normalized EBITDA of €114.27 million for an EBITDA margin of 10.9%. Based on net adjusted debt of €357.5 million, the company reported a leverage ratio of 3.1x.

Existing corporate and secured ratings are B/B2, with a negative outlook on both.