Fresenius talks pro rata at Libor plus 225 bps, sets U.S. launch

By Sara Rosenberg

New York, May 31 - Fresenius SE & Co. KGaA is talking its U.S. and euro revolver and term loan A debt at Libor/Euribor plus 225 basis points and has set a bank meeting for 11 a.m. ET on Tuesday to launch the U.S. debt, according to a market source.

A meeting was held in Europe on Thursday for the euro denominated pro rata tranches.

The five-year pro rata debt is comprised of a $200 million revolver, a €650 million revolver, a $200 million term loan A and a €700 million term loan A, the source said.

In addition, banks are also being offered a €200 million carve-out from the €500 million seven-year term loan B.

Upfront fees on the euro debt range between 40 bps and 75 bps depending on ticket size, while fees on the dollar tranches will come out next week, the source continued.

The company is also planning on getting a $1.2 billion seven-year term loan B, and this institutional debt is expected to come to market in July.

Proceeds will be used to help fund the public takeover offer made to Rhon-Klinikum AG shareholders and the refinancing of a credit facility that was obtained in 2008 for the acquisition of APP Pharmaceuticals.

Based on company documents, it is anticipated that other funds for the transaction will come from about €2.1 billion of bonds comprised of €1.5 billion and $750 million.

Backing the entire financing package is a commitment for a bridge loan divided between €3.1 billion and $2.15 billion.

Deutsche Bank, JPMorgan, Societe Generale, Credit Suisse and UniCredit are the lead banks on the debt.

In addition, the company intends to raise up to €1 billion through equity instruments.

The company is targeting net debt to EBITDA of less than 3.5 times but more than 3 times in 2012 and at the upper end of the 2.5 times to 3 times range in 2013.

Under the proposed takeover, Fresenius is offering Rhon-Klinikum shareholders €22.50 per share in cash, for a total purchase price of around €3.1 billion.

Closing is targeted for the third quarter, with the offer contingent upon a minimum acceptance threshold of 90% of Rhon-Klinikum's share capital and upon antitrust approval. Fresenius anticipates that a few hospital locations may need to be divested to secure antitrust clearance.

The plan is to combine Rhon-Klinikum into Helios to create a new entity named Helios-Rhon. This entity will have sales of about €6 billion and will be the largest private hospital operator in Germany.

Fresenius is a Bad Homburg, Germany-based provider of dialysis services and products.

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