Cheplapharm offers price talk on €1.48B term loan

Price talk on the €1.48 billion, seven-year term loan B refinancing from Cheplapharm Arzneimittel GmbH is guided at E+400 with a 0% floor offered at 99.50 following an investor call earlier today. Small group meetings follow through to tomorrow, and replies are due by Feb. 11 via a group led by joint physical bookrunners Credit Suisse, Deutsche Bank and J.P. Morgan.

Guidance suggests a yield of 4.15%. Proceeds take out the company's €980 million term loan due 2025, with the €500 million upsize to be used for general corporate purposes, including to fund agreed and future acquisitions.

The deal comes with six months of soft-call protection at 101. Barclays, Citi, Commerzbank, ING and UniCredit are also bookrunners.

Ratings are affirmed from S&P Global Ratings at B for both issue and issuer, with a positive outlook and a 3 recovery rating. Moody’s and Fitch are expected to follow with issuer ratings of B2/B+, banks say. Cheplapharm is a speciality generic pharma group. In its assessment, Ratings said it expects the group to continue to generate high levels of fresh cash flow that will, along with the new debt, support the acquisition of branded prescriptions medicines.

Fitch put its issuer and BB- secured rating for Cheplapharm on positive watch on Jan. 17 after the company confirmed plans for an IPO that would lead to a more conservative financial policy with a target leverage ratio of roughly 3x. The listing was initially targeted for the first quarter of this year, but Cheplapharm has since delayed the timetable citing unfavorable market conditions, according to a Jan. 28 statement.

The firm’s €980 million TLB-4 due July 2025 was agreed in 2020 priced at E+350, with a 0% floor, replacing a TLB-3 with the same maturity that had been priced with a margin of E+400. Cheplapharm is also a high-yield issuer, and in October 2020 it placed a €1 billion-equivalent cross-border deal that included a €575 million offer of 4.375% notes due 2028. Prior to that, the firm placed its debut bond offering in January 2020 as a €500 million issue of 3.5% notes due 2027.

Before news of the refinancing, the TLB-4 had traded off a little in the secondary market in sympathy with volatile high-yield conditions, to be bid at 99.375, from around 99.875 in mid-January. The 2028 notes, meanwhile, closed on Friday bid at 101.8 for a yield of 3.875%, down from around 104.5 in mid-January, according to S&P Global Market Intelligence. The 2027 notes closed at 99.885 for a yield of 3.52%, down from nearly 102 at the start of February.

Cheplapharm is a specialty pharmaceuticals company headquartered in Greifswald, Germany, with an international footprint and a portfolio of products across multiple therapeutic areas, including cardiology, oncology and infectious diseases. The firm is family owned.