Biogroup LCD updates bond and loan pricing before Jan. 28 deadline

Biogroup LCD has reverse-flexed price talk on its new senior secured Term Loan B, while outlining the talk on its €1 billion debut in the high-yield market.

The transaction, which refinances the company's capital structure, now comprises:

* A seven-year Term Loan B now talked at E+350-375 with a 0% floor at 99.75, to yield around 3.59%-3.85%. The margin was originally guided at E+375-400 to yield 3.85%-4.11%. The term loan will be sized at up to €1.5 billion, from initial suggestions of €1.4 billion to €1.65 billion. It will carry six months of 101 soft-call protection.

* A €750 million offering of seven-year (non-call three) senior secured notes to be priced at 3.25%-3.5%, from IPTs of high 3%.

* A €250 million offering of eight-year (non-call three) senior notes guided at 5%-5.25% from IPTs of mid-5%.

Books on the bonds and loans close at 10 a.m. U.K. time on Jan. 28 for pricing thereafter.

J.P. Morgan (B&D) is the sole physical bookrunner on the bonds and is also a global coordinator and joint bookrunner alongside BNP Paribas and Natixis. On the loan transaction, BNP Paribas, J.P. Morgan and Natixis are all global coordinators and physical bookrunners.

Citi, Credit Agricole CIB, Deutsche Bank, Goldman Sachs and HSBC are joint bookrunners on the financing.

Proceeds from the bonds and new loan, together with about €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.

Corporate ratings have been confirmed at B-/B2/B, while facility ratings on the secured have been confirmed at B-/B2/B with an S&P Global Ratings recovery rating of 3. The unsecured debt is rated CCC/Caa1/CCC+ with an S&P Global Ratings recovery rating of 6.

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.

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.