(Dec 13): Grifols SA has included a term in its €1.3 billion (RM6.05 billion) private debt placement that would allow Brookfield Asset Management Ltd to refinance the deal early — a sign the Spanish drugmaker is leaving the door open for the private equity firm to make another approach.
The clause allows the debt to be redeemed within six months of being issued, at a price of 104% and accrued interest. But it can only be used by Brookfield, or a Brookfield-led group as the buyer of the company, according to people familiar with the deal.
Brookfield’s pursuit of Grifols formally ended two weeks ago when the private equity firm announced it was shelving a plan to take over the company, which collects blood plasma and turns it into treatments for diseases such as hepatitis and hemophilia. The bond sale is the latest attempt by chief executive officer Nacho Abia to show investors that the company — which has struggled since it was targeted by shortseller Gotham City Research — can manage its debt burden.
The main reason for walking away was differences with the board over price. Brookfield had planned to acquire Grifols in partnership with the billionaire family that owns about a third of the company.
On Wednesday Grifols issued the notes, which mature in May 2030, at a yield of 7.125% to a group of investors. Proceeds are mostly earmarked for redeeming bonds due in February next year in full and repaying loans due in November. Grifols also announced an 18-month extension of an existing revolving credit facility to May 2027.
Greater flexibility
According to people familiar with the deal, the debt is structured more broadly than similar bonds in order to give the company much greater flexibility in the event that it is acquired.
Private placements allow companies to sell debt much more quickly than a traditional refinancing route, which requires banks and the company to put together long, complex offering memorandums for investors and to attain a credit score from a ratings agency.
Grifols’ deal was assembled shortly after Brookfield opted not to pursue its purchase of the company, the people said, requesting anonymity because the details aren’t public.
A spokesperson for Brookfield declined to comment. A spokesperson for Grifols didn’t immediately respond to Bloomberg’s request for comment.
The Spanish company’s bonds and stock rallied on Thursday morning following the news of the private debt sale. Bonds due in October 2028 rose around two cents on the euro in early morning trading before retracing slightly.
The day before S&P Global Ratings raised the company’s rating by one notch to B+ from B, and said it expected the drugmaker to improve its free operating cash flow generation to around €400 million in 2025.
The market is somewhat split over Grifols’ prospects. The company is poised for its worst year on record. Its shares have plummeted almost 40% so far in 2024 — and are currently the most-shorted in the Stoxx 600 Health Care Index — yet analysts are broadly optimistic on the company.
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