TPG-backed Immucor outlook cut to negative at S&P on refinance concern

  • TPG’s Immucor provides blood-, transplant-diagnostic products
  • Profitability seen pressured and leverage elevated
  • Offsets include strong market position in industry

TPG Capital-backed Immucor saw its outlook cut to negative from stable by Standard & Poor’s, which said the provider of blood-transfusion- and transplant-diagnostic products and services may have a tough time refinancing a term loan coming due in Aug. 2018.

The credit-rating firm said it expected Immucor’s profitability to “remain pressured over the next 12 months” and its “leverage will remain elevated at around 10x.”

Immucor, of Norcross, Georgia, is owned by TPG Capital. Founded in 1982, the company, via its 1,050 staffers, provides, among other things, reagents and equipment to ensure that blood donors and recipients are compatible; and assays used for typing and screening before transplants and for monitoring afterward.

TPG acquired Immucor for $27 a share, or $1.94 billion, cash in August 2011.

S&P analyst Maryna Kandrukhin affirmed her CCC+ corporate-credit rating on Immucor, saying that higher revenue will enable Immucor to cover operating expenses and debt amortization over the next year.

S&P says foreign-exchange rates have turned in the company’s favor. S&P sees “continued growth in [Immucor’s] installed instrument base globally” and “more stable demand for transfusion blood in the U.S., which could lead to a gradual increase in reagent” use there.

The issues? Profitability “will be pressured as long as a large portion of its revenue growth comes [from] emerging markets,” which use less of the company’s wider-margin reagents than the U.S. does. And S&P also cited “continued elevated R&D investment” in two acquired companies.

Immucor “operates in a mature sector with limited growth prospects and moderate pricing pressures,” the analyst said. The company’s business focus is “narrow” and Immucor relies heavily on its main reagent-manufacturing facility, S&P said.

Partly offsetting these points are the company’s “entrenched market position” within the blood-typing industry and competitive advantage from its razor-and-blades business model, the analyst wrote.

Immucor has a senior secured term loan maturing in August 2018 and senior unsecured notes maturing a year later. The analyst affirmed a B- issue-level rating on the senior secured debt and CCC- rating on the senior unsecured notes.

Kandrukhin said an outlook upgrade to stable depends on Immucor refinancing its term loan or otherwise addressing “its maturing capital structure over the next 12 months.”

TPG declined comment. A spokesman for Immucor couldn’t immediately be reached.

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