Avantor cut the size of the riskiest portion of a multi-billion junk bond sale backing its acquisition of VWR on Friday, after struggling to lure investors into the deal.
The US life sciences company launched the unsecured note, which is rated Caa2/CCC+/B- at a yield of 9%, according to a message from one of the lead managers seen by IFR.
That was the wide end of price talk and at least 150bp wide to early indications of low to mid 7%s that had circulated when the company announced the deal over two weeks ago.
Avantor is now looking to raise US$2bn through an eight-year unsecured junk bond - or US$250m less than originally planned.
It will increase the sizes of a secured bond and a term loan that are also part of the financing package to make up for the difference, the message said.
The dollar portion of the bond sale appeared to be getting more pushback from investors compared to a smaller tranche denominated in euros.
A US$1.5bn secured tranche, which was upsized by US$100m and is rated B2/B/BB, also launched at the wide end of price talk, or 6%, compared to whispers of low to mid 5%s.
A euro-denominated secured bond, whose €500m size remained unchanged, launched at a yield of 4.75%, which was at the tight end of price talk, but still wide to whispers of low to mid 4% that had circulated initially.
The changes to the deal’s structure come a day after the company agreed to extensive tweaks to the deal’s covenants in response to criticism of weak investor protections embedded into the original terms.
Through the purchase of VWR, Avantor’s private equity owner New Mountain Capital is saddling the combined company with over US$7bn in debt, increasing leverage to at least 7 times.
Goldman Sachs is the lead underwriter on the financing, which is expected to price later on Friday.