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Third time lucky for Gerresheimer

Gerresheimer Glas, acquired by Blackstone last November from Investcorp and JP Morgan Partners, has laid to rest the demons of two failed bond attempts. Earlier this week it priced €150m of B–/Caa1 rated senior notes of Gerresheimer Holdings through JP Morgan and CSFB.

The company tried to sell €150m of bonds through Goldman Sachs and JP Morgan in July 2002, but postponed the sale due to market conditions. That issue was reduced to €125m and then postponed again.

There was a strong reception for the new paper, but some investors admitted that they bought the deal out of necessity rather than choice. “People had no choice but to buy this. They are sitting on a wall of cash and it is better to be invested than not,” said one long-only investor.

The book was heavily oversubscribed and enabled the issuer to tighten yield guidance from 8%–8.25% to 7.875% hours before launch. The 10-year non-call fives priced at the revised level. Proceeds will repay a mezzanine bridge of the same amount to part-fund the takeover by Blackstone.

Investors also cited misgivings over covenants, in particular the restricted payment test, which was described by one investor as “particularly egregious, but typical of Blackstone”. The leads countered that covenant complaints had been muted.

UK-based funds were also unhappy with the small, 17% equity contribution from the sponsor. “This is basically an acquisition vehicle for Blackstone,” said one London-based portfolio manager. “However, Blackstone has PIKed almost every deal they’ve done, and taken all the money out of Celanese.”

Reports said more than €1bn in orders had been placed and that the book was 10x covered. Allocations were on course to be small. The bonds are part of a €522.5m financing that includes €255m in loans, a €37m equity contribution, a €55.5m subordinated shareholder loan and a €25m subordinated vendor loan. Loan market sources said that the syndication had progressed well.