Cambrex talks $250 million equivalent dual-tranche deal; $79 million Monday fund outflows

By Paul A. Harris

Portland, Ore., Oct. 27 – On a generally slow news day in the primary market Cambrex Corp. set price talk in a $250 million equivalent repricing of its incremental fungible first-lien term loan (B2/B) on Tuesday.

The dollar-denominated tranche is talked with a 450 basis points spread to Libor atop a 1% Libor floor.

The euro-denominated tranche is talked at a 475 bps spread to Euribor with no Euribor floor.

Price talk for new money accounts is 99.5 for both tranches (see related story in this issue).

MultiPlan

There remained conversation in the market about the postponed MultiPlan Inc. (MPH Acquisition Holdings LLC) $2.47 billion term loan B, which the company was attempting to put in place tight to the Libor plus 325 to 350 bps talk, before pulling the deal on Monday, sources say.

The MultiPlan deal was heard to have succumbed to an investor perception that covenants left too much incremental first-lien flexibility, according to a trader.

However a loan investor, speaking Tuesday on background, said that generally every deal, these days, has too much flexibility of that sort.

Recalling an era when corporate borrowers had to approach lenders for consents to do any incremental borrowing, the investor said that contemporary covenants tend to put such permissions for the borrower in place, circumventing requirements for lender consents.

The investor, who looked at the MultiPlan deal but passed, said that the real problem was the coupon: Libor plus 325 bps.

It just wasn't enough, the source said.

Word in the market was that there was a big order for the MultiPlan loan at Libor plus 375 bps, but the market seemed to be taking that information with a grain of salt, the investor said.

In loaning money to MultiPlan lenders engender two major risks, the primary one being the emergence – under a possible Biden administration – of a so-called single payer health care system in the United States, possibly in the form of Medicare for all.

The other major risk is closer regulation of balanced billing, which bills patients for the difference between the provider's charge and the insurer's allowed amount, often the source of sticker shock for patients, and likely to be in the gunsights of potential health care reformers, the investor said.

Whereas extensive balance billing reform could impair one of the company's sources of revenue, a true single-payer system would jeopardize MultiPlan's very existence.

Had it come at a more attractive price the loan structure which MultiPlan abandoned should have been survivable under anything short of a true-single payer system, the source added.

$79 million Monday outflows

The dedicated leveraged loan funds sustained $79 million of net outflows on Monday, the most recent session for which data was available at press time, according to a market source.

Loan ETFs had $46 million of outflows on the day.

Actively managed bank loan funds had $33 million of outflows on Monday, the source said.

The combined bank loan funds are tracking $138 million of net outflows for the week that will conclude with Wednesday's close, according to the market source.

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