Under the weather

Private equity sponsor Cinven has opted to let lenders take the keys of Spanish healthcare investment USP Hospitales, rather than inject new cash into the business. Lenders will write down half of about €500m in outstanding debt in exchange for two-thirds of the business.

Cinven bought USP in a secondary buyout from Mercapital in 2007 for a total consideration of €675m. The sponsor contributed about €175m in equity backed by debt provided by arrangers Barclays and RBS.

The debt package arranged was never successfully syndicated, making talks between the two lenders and equity holders relatively straightforward.

Advisers said UK banks that were creditors in a distressed Spanish situation were generally showing greater willingness to take the keys from equity owners even where that meant suffering big write-downs, in contrast to Spanish banks which were more nervous about having to write down debt aggressively.

Under the debt-for-equity swap agreed Cinven will retain a less than 10% stake in the business, with the remaining roughly 25% of equity going to management.

Cinven has been a significant investor in private healthcare clinics. In 2007 it also bought Bupa Hospitals in the UK for €2.13bn, and owns Partnerships in Care, another UK healthcare group, that specialises in mental health and related services.