Elsan revises loan terms under ESG-linked margin ratchet

Groupe ELSAN SAS has revised terms of the environmental, social and governance-linked ratchet on its new €1.75 billion term loan B, with a ratchet of up to +/- 15 basis points now available, tied to the achievement of sustainability-linked targets.

Investors have been asked to reconfirm their rolls and recommitments on the new seven-year term loan by 2 p.m. U.K. time today via physical bookrunners BNP Paribas and KCM. Credit Agricole CIB, Deutsche Bank, Natixis and Societe Generale CIB are passive bookrunners on the deal.

Under the new ESG margin ratchet, if three of the key performance indicators are met, the margin will ratchet 15 bps tighter (from 7.5 bps tighter previously), and if two are met, the margin will move in by 10 bps (from 5 bps tighter previously). If only one target is met, the margin will widen by 10 bps (from plus 5 bps originally), and if none are met then the margin will widen by 15 bps (from 7.5 bps previously).

A margin ratchet holiday will run for six months from the close of the acquisition. Natixis is the sustainability coordinator on the deal.

The new facility will price at E+350 with a 0% floor offered at par, to yield 3.55% to maturity. The deal will roll lenders in the existing €1.4 billion term loan due October 2024 and new-money lenders to a €350 million add-on into a single, seven-year tranche. Proceeds from the new-money portion will back the firm's takeover of C2S, a group of generalist clinics that Elsan acquired from Eurazeo Patrimoine late last year.

Ticking fees are applicable to the €350 million new-money portion, with 0% payable until day 45, 50% of the margin payable from days 45 to 90, and 100% thereafter.

The deal carries six months of 101 soft-call protection.

Elsan's outstanding term loan was agreed back in 2015 to support the creation of the firm through the merger of Vedici and Vitalia. Since then, the term loan has been increased to support various add-on acquisitions, and in 2019, the maturity was pushed out to October 2024. The existing term loan was trading in a 100/100.5 context before the latest add-on was announced.

Elsan is a French private healthcare group backed by KKR (43%), CVC (22%), Tethys (14%), and co-investors and management (21%).