Reno De Medici SpA will price a €445 million offering of five-year (non-call one-year) secured sustainability-linked floating-rate notes early next week, having postponed the deal's completion on account of "current market conditions," according to sources involved in the transaction.
Investor calls concluded Nov. 25 via a Barclays-led (B&D) bookrunning group. Initial price thoughts were announced Nov. 24 at E+500-525 with a 0% floor offered at 99.5 for the borrower's planned €445 million issue of five-year (non-call one-year) notes, with proceeds backing the take-private of the Italian packaging group by Apollo.
BNP Paribas is also global coordinator on the transaction, with Credit Suisse, Intesa Sanpaolo and UniCredit as joint bookrunners.
Markets have today been rattled by the emergence of the new COVID-19 variant B.1.1.529 in southern Africa, with the iTraxx Europe Crossover trading around 15 basis points wider on the week. Travel and hospitality bonds have also seen a significant sell-off, and this week's new issues are bid well below where they were offered.
However, earlier today, Italian waste management group Itelyum did complete a €30 million add-on to its 4.625% sustainability-linked secured notes due 2026.
Apollo agreed to terms in July to acquire a 67% stake in Reno De Medici from its two largest shareholders, Cascades and Caisse de dépôt et placement du Québec, and launched a mandatory offer for the acquisition of the remaining shares in the company Nov. 22, which will run to Dec. 17.
Corporate and issue ratings were earlier this week confirmed at B/B2/B+ and B/B2/BB-, respectively. Rating agencies highlight Reno De Medici's leading position in European carton and solid board packaging, with more than 60% of its revenue derived from the noncyclical food industry.
Leverage at Reno De Medici following the buyout, however, will be about 9x this year, according to S&P Global Ratings, which the agency expects will reduce to between 5.3x and 5.7x on an S&P Global Ratings-adjusted basis. While significantly lower than the 8x leverage at Ardagh Group (B+/B3/B+), Fitch notes that such leverage is significantly above that of higher-rated peers such as Smurfit Kappa and CANPACK, which Fitch sees as 2x-3x levered.
Accounts earlier this week noted the eye-catching 5% handle on Reno De Midici's new deal and were favorable on the floating-rate aspect on account of a robust CLO bid. Although KemOne and SIG earlier this month offered 5% handles on their deals, many single-Bs were noted for coming at 4% recently, with Burger King France's €620 million of five-year floating-rate notes issued in October landing at E+475, for example.
Details on sustainability targets have not yet been released, though S&P Global Ratings says the company's push toward sustainability could be improved recycled fibers in its packaging products.
Reno De Medici Group is the largest producer of recycled carton-board in Italy, France, the Netherlands and the Iberian Peninsula.
