Catalent term loan steady with business review news and preliminary earnings results

By Sara Rosenberg

New York, Aug. 29 – Catalent Inc.’s term loan held firm in the secondary market on Tuesday as the company announced the establishment of a committee to review its business, and preliminary financial results for the fiscal 2023 fourth quarter.

The term loan was quoted at 98 bid, 99 offered, unchanged from Monday’s levels, a market source remarked.

The company said that it formed the new strategic and operational review committee to conduct a review of its business, strategy and operations, as well as its capital-allocation priorities, in order to maximize long-term value.

Additionally, the company appointed four new independent directors to its board of directors.

In connection with these initiatives, Catalent entered into a cooperation agreement with Elliott Investment Management LP, one of its largest investors, under which Elliott has agreed to customary standstill, voting, confidentiality, and other provisions.

Catalent preliminary results

Along with announcing the initiatives, Catalent released preliminary financial results for the fourth quarter of fiscal 2023, which ended June 30.

For the quarter, net revenue was $1.07 billion, a 17% decrease from the $1.29 billion reported for the fourth quarter a year ago.

Net loss for the quarter was $86 million, or $0.48 per basic and diluted share, compared to net earnings attributable to common shareholders of $168 million, or $0.94 per basic share, $0.93 per diluted share, in the comparable period last year.

And, adjusted EBITDA for the quarter was $139 million, or 13% of net revenue, compared to $358 million, or 28% of net revenue, in the fiscal 2022 fourth quarter.

As of June 30, the company had $4.85 billion in total debt, versus $4.6 billion in total net debt as of March 31. The company’s net first-lien debt over LTM adjusted EBITDA was 2.8x at June 30, and net leverage as of June 30 was 6.4x, compared to 4.9x at March 31 and 2.9x at June 30, 2022.

Catalent is a Somerset, N.J.-based provider of development sciences and manufacturing platforms for medicines.

Fund flows

In other news, actively managed loan fund flows on Monday were positive $20 million and loan ETFs were positive $39 million, market sources said.

Actively managed high-yield fund flows on Monday were negative $20 million and high-yield ETFs were positive $135 million, sources added.

Loan bids rise

According to IHS Markit data, average secondary market bids in the United States on Monday were 92.58, up 0.05% from the previous day and up 0.77% year to date.

Some of the top advancers on Monday were Zywave’s (EISI) November 2020 covenant-lite term loan B at 88, up from 79.88, Cano Health’s January 2022 covenant-lite term loan at 63.8, up from 61.7, and Venator’s June 2017 covenant-lite term loan B at 47.83, up from 47.19, IHS Markit data said.

Some top decliners on Monday were Driven Performance/Holley Performance’s November 2021 term loan at 94.13, down from 97.25, AMC Entertainment’s April 2019 covenant-lite term loan B at 76, down from 77.83, and Instant Brands’ April 2021 covenant-lite term loan at 19.75, down from 20.17.

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