GenesisCare €13M Term Loan Auction Fails to Trade, Reserve Price Set in 50s

GenesisCare coverage from Reorg's EMEA Core Credit team.

A €13 million chunk of specialist private health oncology services provider GenesisCare’s euro-denominated term loan was put up for auction a few weeks ago but failed to trade. The piece had a reserve price in the 50s but failed to attract any bids, sources told Reorg.

GenesisCare is facing liquidity issues and rising leverage due to margin contraction primarily from its U.S business, and cash burn due to high capital expenditure, requiring the group to raise capital from its shareholders and potential external investors.

The group recently secured a 75 million Australian dollars ($52 million) one-year bridge loan from its sponsor KKR. Its other institutional shareholder China Resources Holding has the option to provide up to AUD 88 million on a pro rata basis, which is under internal approval process. GenesisCare is 36% owned by passive investor China Resources Holdings, 33% by management, including doctors, and 31% by KKR.

 

The group will potentially seek a larger capital raise within the next 12 months, targeting a capital raise in the range of AUD 200 million and AUD 300 million. This, together with proceeds from the disposal of the Australian cardiology business, could provide it with the liquidity runway to support its operations and financing needs at least for the next 24 months, but GenesisCare would need to substantially scale back growth capex to become cash generative, as reported.

There has still been no update from the company on the planned disposal and on whether China Resources will provide any capital, sources said.

–Robert Schach, Andrew Ross