Wed 07/27/2022 12:05 PM
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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.

 













































































































































































GenesisCare - Pro Forma as of 06/21/2022


03/31/2022

EBITDA Multiple

(USD in Millions)

Amount

Price

Mkt. Val.

Maturity

Rate

Yield

Book

Market


AUD 100M MIV Revolving Credit Facility due 2024

-


-

2024



AUD 100M Stark Revolving Credit Facility due 2024 1

60.0


60.0

2024



MIV Term Loan B due 2025 2

629.0


629.0

2025



Stark Term Loan B due 2027 3

1,020.0


1,020.0

2027



Total Senior Secured Debt

1,709.0

1,709.0

18.7x

18.7x

AUD 75M KKR Bridge Loan due 2023 4

52.3


52.3

2023



Total Bridge Loan

52.3

52.3

19.2x

19.2x

Total Debt

1,761.3

1,761.3

19.2x

19.2x

Less: Cash and Equivalents

(106.4)

(106.4)

Net Debt

1,654.9

1,654.9

18.1x

18.1x

Operating Metrics

LTM Reported EBITDA

91.6


Liquidity

RCF Commitments

150.0

Less: Drawn

(60.0)

Plus: Cash and Equivalents

106.4

Total Liquidity

196.4

Credit Metrics

Gross Leverage

19.2x

Net Leverage

18.1x


Notes:
The capital structure is on a pre-IFRS 16 basis as per SFA. The RCF is currently unavailable given it is subject to a 7.5x net leverage test when 40% plus drawn.
1. AUD 80M was drawn.
2. MIV TLB comprises AUD 495M, €140M, $58M and £34M.
3. Stark TLB comprises AUD 208M, €22M, $771M and £52M.
4. Pro forma for the new AUD 75M one-year bridge loan from KKR in June 2022. Converted to USD based on AUD/USD exchange rate of 0.697746 as of June 21, 2022.
Pro Forma: The capital structure is pro forma for the new AUD 75M one-year bridge loan from KKR in June 2022.



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.
EMEA Covenants has analyzed the SFA dated September 2021, to see the covenant analysis or to talk to one of our legal analysts click HERE. You can get access to this product if you have a copy of the SFA.

–Robert Schach, Andrew Ross
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