Ceva sante seeks $644 million loan for acquisitions and refi

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French veterinary pharmaceuticals firm Ceva Sante Animale is raising a 600 million euro ($644 million) add-on term loan to finance two acquisitions and refinance expensive subordinated debt, banking sources said. Ceva Sante raised an €818m buyout loan in 2014, which was Europe's first 'pure' covenant-lite loan. It also raised €200m of payment-in-kind (PIK) notes at that time from a mezzanine fund owned by private equity firm Ardian. The company now wants to use €215m of the new €600m term loan B to repay the PIK loan, which charged double digit interest margins, and associated prepayment penalties. Ceva Sante will also use €310m to finance two acquisitions. It is buying the swine vaccine business of Sanofi’s animal health company Merial, which will clear the way for the acquisition of Merial animal health by German pharmaceutical firm Boehringer Ingelheim. Ceva is also buying a business in Brazil.

The remaining €75m of term loan B will be kept as cash on the company's balance sheet, the sources said. Ceva Sante declined to comment on the financing. Credit Agricole, Goldman Sachs, Natixis and Nomura are leading the financing. Pricing will be disclosed at a bank meeting in London on Wednesday 16 November, the sources said.

European leveraged loan has tightened in 2016. The new loan is expected to price tighter than the 2014 term loan which paid 350bp with a 1% Libor floor, the sources said. Ceva has performed well and has deleveraged to around 3.4 times senior debt from 5.5 times when the original financing was put in place in 2014, the sources said.

Ceva was originally part of Sanofi-Aventis, which sold it in 1999 to PAI Partners, which in turn sold it in 2003 to Sweden's Industri Kapital. Management and employees acquired a majority stake in 2007. Euromezzanine and Natixis took a minority stake, backed with €433m of loans. Sagard joined as a minority shareholder in 2010, followed by Temasek in 2014.