(Reuters) – Swiss drug firm Nycomed is asking its lenders for longer-term covenant relief as it continues to explore ways of managing its 3.7 billion euros ($4.5 billion) net debt, bankers said on Friday.
Nycomed is asking lenders to reset the covenants of an existing leveraged loan in exchange for a 50 basis point fee and a 100 basis point interest margin increase to the base rates across its term loan A, B, C and second lien tranches, the bankers said.
The request requires consent from 50 percent of Nycomed’s lenders, which are roughly split into Nordic banks and institutional fund investors.
“I think it’s a fair offer, but they have a pretty binary syndicate, with 50 percent of the debt held by Nordic banks, so if it works for them, it will work,” one banker said.
The privately owned company secured one quarter covenant relief in March, but is seeking further headroom of around 15-20 percent for the life of the loan after recent weak performance.
Nycomed suffered a recent dip in earnings before interest, tax, depreciation and amortisation (EBITDA) due to lengthy litigation with Israeli pharmaceuticals company Teva (TEVA.TA) over the sale of a generic version of Nycomed’s ulcer drug Protonix before the patent expiry, and while awaiting FDA approval of its key lung drug Daxas in the U.S.
Nobody at Nycomed was immediately available to comment.
Nycomed said earlier this year it was likely to launch an initial public offering by 2011 in line with other private-equity-owned companies that are seeking exits for sponsors. [ID:nLDE63Q13A]
A second banker said the company was also considering tapping the high-yield market, though plans could be delayed by current market volatility.
Nycomed’s private equity owners — Nordic Capital, Credit Suisse’s DLJ Merchant Banking, Coller International Partners and Avista — financed the purchase of Altana’s pharmaceutical business in 2007 with a 5.7 billion euro loan.
Lenders have until Monday June 14 to commit to the amendment, one banker said. JP Morgan is advising Nycomed on the transaction. (Reporting by Zaida Espana, editing by Will Waterman) ($1=.8205 Euro)