Moody's assigns B2 to Ephios

Moody's Investors Service said it assigned a B2 corporate family rating and a B2-PD probability of default rating to Ephios Subco 3 Sarl (Synlab), the new top entity of the Synlab Group. Concurrently the agency assigned B2 instrument ratings to a new senior secured term loan B and new senior secured notes for a total of €1.45 billion with a seven-year tenor and a new €500 million senior secured revolving credit facility with 6.5 year tenor all raised by Ephios Subco 3.

Moody's said it withdrew Synlab AG’s Ba3 corporate family rating and Ba3-PD probability of default rating. The outlook is stable.

Cinven, the controlling shareholder of Synlab, announced on Sept. 29, a voluntary public tender offer to acquire all shares outstanding, not directly held by it, at €10 per share. It now controls around 85% of Synlab.

This rating action assumes the full repayment of Synlab Bondco plc’s €385 million senior secured term loan B-4 by the close of the transaction, Moody’ said.

Synlab’s Moody's adjusted debt/EBITDA will likely be around 5.2x following the closing of the transaction but the agency said it projects the company will lower its leverage under 5x over the next 12-18 months.

The proceeds from the new senior secured debt facility will be used alongside a new €500 million of payment-in-kind notes issued outside of the restricted group, and €84 million of balance sheet cash of the company to fund the acquisition of 85% of Synlab AG' shares, refinance debt and cover related transaction costs.

Concurrently the ratings of the outstanding €535 million senior unsecured term loan A and €500 million senior unsecured revolving credit facility incurred by Synlab AG, as well as the €385 million term loan B-4 incurred by Synlab Bondco will be withdrawn on their repayment.

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