Deal Architect: Hard assets, hard sell
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| With three separate entities at the senior level, the success of the structure will depend on having watertight intercreditor agreements between them |
The first deal was refinanced (and then withdrawn) to be replaced by this latest structure, the product of South African healthcare group Netcare’s acquisition of GHG in April 2006 for £2.2 billion ($4.4 billion).
As soon as the buyout became public, an opco/propco refinancing was on the cards – not least because the leverage in the GHG Finance deal was comparatively low and because London & Regional Properties was a member of the winning consortium (along with Apax Partners and Brockton Capital).
The deal that has eventually emerged is indeed based on opco/propco principles, but has been a long time coming and involves a puzzlingly complex structure.
Even the most cursory glance at the deal raises questions – not least why it has two issuers (which are identical from a structural standpoint) plus an additional group of senior lenders – which means that the borrower is repaying loans to three different groups of senior lenders.