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Biomet expected to launch $2.565 billion bonds on Aug. 1
By Paul A. Harris
St. Louis, July 12 - A $2.565 billion junk bond deal backing the $11.4 billion buyout of Biomet, Inc. is expected to launch on Aug. 1, according to an informed source.
The source added that relative to the half dozen prospective issuers that have recently postponed transactions - 11 tranches totaling $4.45 billion pulled since June 26 - the underwriters are feeling positive about the Biomet deal.
"It's levered but it's in the health care space, and people like that," the source said, adding that in the high-yield secondary market health care bonds have performed relatively well in comparison to other sectors in the recent downturn in high yield.
Banc of America Securities LLC, Goldman Sachs & Co., Bear Stearns & Co., Lehman Brothers, Merrill Lynch & Co. and Wachovia Securities will lead the Rule 144A bond offering.
The most recent information on the deal's structure features a pair of $775 million senior note tranches (B3/B-) -one a cash-pay note, the other a payment-in-kind toggle note - in addition to $1.015 billion of senior subordinated notes (Caa1/B-).
The Biomet LBO is being done by LVB Acquisition, LLC and LVB Acquisition Merger Sub, Inc., which are indirectly owned by The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co. and TPG.
On Thursday they announced the successful completion of the tender offer for all outstanding common shares of Biomet. A total of 203,573,642 Biomet shares were tendered, representing 82.85% of Biomet's outstanding shares.
With key pieces of the financing still pending, including the above-mentioned junk bond deal and a $4.35 billion credit facility, Prospect News asked the source how the tender was funded.
The source responded that it was funded on a temporary basis with a tender facility, which has not been syndicated.
Once the bonds have priced, the overall transaction will fund and close, and the permanent financing will replace the tender facility, the source added.
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