(Bloomberg) -- The embattled Spanish drugmaker Grifols SA is in talks with banks to refinance bonds due next year and extend a revolving credit line — together about €1.4 billion ($1.48 billion) — as it seeks to quell investor concerns about its ability to meet obligations.
“Plan A is to refinance” the €370 million in bonds due in 2025, Chief Executive Officer Nacho Abia told Bloomberg in a phone interview Thursday. “We could look at repaying it with our cash flow, but we don’t want to be too tight.” The drugmaker is also in talks about extending a $1 billion revolving credit facility due in November 2025, he said.
A world leader in making medicines from blood-plasma to treat illnesses such as hepatitis, Grifols is rushing to put its house in order as the spotlight returns to its financial situation after Brookfield Asset Management on Wednesday dropped plans to acquire it. Brookfield had been working for months to take the company private in partnership with the Grifols family, which owns about 35% of the namesake drugmaker. The asset manager on Nov. 19 made a tentative offer that valued the company at €6.45 billion — a bid rejected by the Grifols board.
The company’s shares, which tumbled as much as 14% Wednesday after Bloomberg reported Brookfield’s decision to abandon its takeover plan, were trading about 5% lower at 1:09 p.m. in Madrid.
Grifols will hold its Capital Markets Day in the first quarter of next year, the CEO said. He reiterated the company’s outlook for free cash flow, highlighting improvements in working capital and efficiencies.
At the end of the third quarter, the company’s debt — including leases — stood at €9.2 billion. And although Grifols’ leverage has gradually improved, its ability to generate cash remains a key issue, especially after it spooked analysts with its free cash flow guidance for 2024 of a measly €5 million.
Grifols received $1.7 billion in proceeds in June from a sale in China, which combined with private credit placements was used to repay debt due in 2025. Still, the firm may struggle to repay bonds due in March 2025 and other liabilities, Alantra analyst Alvaro Lenze wrote in a note to clients on Wednesday.
“Grifols is fully reliant on banks’ support” because its cash flow will not be enough to meet the debt maturities, according to the analyst, who pointed to banks’ reticence over the past year to fund both Grifols and Scranton, a financial holding for family members and associates.
For now, Grifols remains confident it can bring the banks around, CEO Abia said.
“Several banks have already confirmed interest in refinancing, even expanding the facility,” he said. “Others are a bit more reticent but we continue to work on it.”
(Updates with more comments from CEO in fifth paragraph. An earlier update was corrected to show the credit line is in dollars, not euros.)
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