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Private equity groups Blackstone, Carlyle, Hermann & Friedman raised about $ 15 billion in debt and loan markets on Thursday as they approached the largest leveraged buyout funding since the 2008 financial crisis. ..
Large debt issuance directed to buyout groups $ 34 billion acquisition It is one of the majority shares of the family-owned Medline, one of the largest pharmaceutical manufacturers in the United States.
Investors have surged debt, shrugged off the high leverage and weak contracts that underpin transactions, and instead reinforced the underlying business strength, especially after pandemics have been added to demand for products such as face masks. I pointed out.
Debt investors were also expected that the Illinois-based company, founded by the Jim and John Mills brothers in 1966, would remain in the family and be run by their respective sons, Charlie and Andy. I pointed out the fact.
The Mills family holds $ 3.5 billion worth of Medline shares, while the Buyout Group is creating a $ 13 billion stock check to supplement its bumper debt raising.
Financing highlights the ferocious pace of Transaction closing So far this year, backed by a wide open capital market, private equity groups have used investor demand to help them buy companies with high valuations using cheap debt. increase.
Christina Paget, Head of Research and Analysis for Moody’s Leveraged Finance, said: “Some of them are reminiscent of 2007.”
According to data provider Refinitiv, the buyout group has recorded more than 10,000 acquisitions so far this year. Transactions have exceeded $ 800 billion, well above the record highs set in 2007.
According to rating agencies S & P Global and Moody’s, bumper debt trading will allow Medline to maintain a debt-to-revenue ratio of about seven times higher. This will reduce the issuer’s overall rating to B level.
Analysts at the Research Group’s Covenant Review also emphasized the weakness of investor protection in transaction documents. In particular, the company can underwrite an additional $ 16.5 billion in debt and even more if certain financial ratio tests are met.
Nevertheless, investors remained bullish on the deal. Bill Zox, Portfolio Manager at Brandywine Global Investment Management, said:
Blackstone declined to comment. Medline, Carlyle, Hellman & Friedman did not respond to requests for comment on this transaction.
Medline Debt Raising
According to those familiar with trading, Medline’s Syndicated Debt is divided into four parts.
A $ 500 million euro-denominated loan priced Thursday, Euribor coupon plus 3.5 percent points.
A $ 7.27 billion loan priced at Libor plus 3.25 percentage points, out of the range of 3.5-3.75 points mentioned above, due to strong investor demand.
According to an index operated by Ice Data Services, the average yield of similarly rated secured bonds already on the market is around 4.3%, while a 3.875% coupon is secured against the company’s assets. $ 4.5 billion bond.
Approximately $ 1.5 billion was taken from the original amount of unsecured bonds and redistributed almost evenly between unsecured bonds and US loans to reduce the company’s borrowing costs.
JP Morgan and Goldman Sachs led a large group of banks where Bank of America led the loan and syndicated bond transactions to investors. The bank declined to comment.
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Private Equity Trio Borrows $ 15 Billion Debt For Large Buyouts
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