Cinven Seeks Loan To Refinance Sebia Buyout

LONDON (Reuters) – Private equity firm Cinven is raising a new leveraged loan to refinance its 800 million euro ($1.1 billion) all-equity purchase of French healthcare diagnostics group Sebia International, bankers close to the deal said.

Banks are offering relatively high leverage of up to six times earnings before interest, tax, depreciation and amortisation (EBITDA) on the all-senior loan, a return to aggressive pre-crisis behaviour as deals remain scarce, the sources said.

“This is a function of supply and demand – if there is a good deal out there, some banks are willing to be aggressive for it,” a banker said.

Cinven declined to comment when contacted by Reuters.

Earlier this month, sources told Reuters that Cinven pre-empted an auction process with an equity-financed bid that valued the group at around 800 million euros – around 12.5 times Sebia’s earnings. [ID:nLDE62E1MX]

Banks’ jostling for the loan mandate is pushing leveraged levels higher from an average of just over four times debt to EBITDA in 2009 – after retreating from pre-crisis highs of 5.85 times in 2007, according to Thomson Reuters LPC data.

Many businesses were sold for far higher leverage multiples at the height of the boom. Cinven’s buyout of Swedish blood test systems manufacturer Phadia in 2007 had headline leverage of 9.5 times, bankers said at the time, rising as high as 12.5 times including capital expenditure.


Bankers working on Sebia’s financing view the healthcare sector as robust and counter-cyclical. Sebia specialises in oncology diagnostics and has performed strongly with EBITDA of around 60 million euros in 2009.

While some bankers believe that leverage of six times could be feasible for a strong company in the right sector, such as Sebia, others see leverage of around five times as more suitable for the company and investors.

“This is a very good deal, we can expect to see leverage levels outside the norm, and banks have reasons to push leverage up, but up to a limit,” one leverage loans specialist said.

Sebia’s loan is expected to be supported by existing lenders in a 140 million euro loan dated November 2006, which backed its purchase by Montagu Private Equity.

European funds including collateralised loan obligation vehicles (CLOs) are also eager to invest in new deals after receiving a flush of loan repayments from high yield bonds or equity issues.

The deadline for Sebia’s refinancing proposals is Thursday. ($1=.7403 Euro)

(Reporting by Zaida Espana; editing by Simon Jessop)