Shares of Grifols SA (BME:GRLS) (NASDAQ:GRFS) rose on Wednesday after Bloomberg News reported that Brookfield Asset Management (TSX:BAM) is seeking bank backing for up to €9.5 billion in debt to facilitate its potential take-private acquisition of the Spanish pharmaceutical producer.
At 4:44 am (0844 GMT), Grifols was trading 2.6% higher at €9.105.
The proposed take-private deal would involve refinancing Grifols’ existing debt, which includes both loans and high-yield bonds. Brookfield has requested banks to commit to providing this financing before selling it on to investors, the report said.
The need for this refinancing stems from a clause in Grifols’ existing debt that would allow bondholders to demand early repayment at a premium if the company is taken private.
This comes on the heels of Brookfield and the Grifols family announcing their intention to consider a bid for the company last month.
Grifols, a prominent blood-plasma maker, has been facing challenges following a short-seller attack in January that sent its shares and bonds plummeting. Subsequent concerns over cash flow and accounting adjustments in China further exacerbated the volatility.
If the take-private deal proceeds, the debt package is expected to total around €8 billion in drawn debt plus a revolving credit facility of up to €1.5 billion. The majority of this financing is likely to be in dollars, Bloomberg added.
By removing the company from public scrutiny, Brookfield and the Grifols family could have more flexibility to implement long-term strategies and address challenges without the pressure of short-term market expectations.
