F.I.S. – Fabbrica Italiana Sintetici is out with price talk of 5.75% area for its planned €350 million 5.5-year (non-call two-year) sustainability-linked secured bond offering, with books set to close today at 2 p.m. London time. BNP Paribas (B&D) and Credit Suisse are joint global coordinators and sustainability-linked bond structuring coordinators.
Corporate ratings are confirmed at B/B3/B with stable, positive and stable outlooks respectively, while secured ratings are given at B/B3/B+.
Investor feedback highlights the attractive segment of the contract development and manufacturing company, or CDMO space, whereby companies provide drug development and manufacturing services to larger pharmaceutical firms. While F.I.S. is noted as a leading player in its domestic market and a strong player in Europe, investors say the business is “small and niche” and note that a key patent expires in 2024.
According to S&P Global Ratings, one patent expiring 2024 which relates to diabetes accounted for 32% of the company’s sales. Investors have voiced similar concerns over patent expiration with respect to Apollo-backed Covis Pharma, which has struggled to price a cross-border bond and loan package this week.
FIS has also brought to the fore concerns over EBITDA add-backs, with Spread Research estimating adjustments of €15 million, €8.5 million of which related to increased prices of raw materials and shipping costs. The company generated €523 million in sales and reported €73.8 million EBITDA for the 12 months ending Sept. 30, 2021, according to S&P Global Ratings.
Spread Research says there are not direct comparable issuers in the European high-yield space with a CDMO model, with U.S firm Catalent, rated BB-/B1, noted as the nearest such comparison. But even then, Catalent is not especially active in the production of active pharmaceutical ingredients, or APIs.
Proceeds will refinance existing debt and fund a dividend payment of €40 million to FIS’ parent company. The bonds will include a step-up adjustment of 20 basis points per KPI, which will be payable at maturity.
Under the firm’s sustainability-linked bond framework published December 2021, the company by 2026 aims to reduce absolute Scope 1 & 2 greenhouse gas emissions by 20%, reduce freshwater consumption by 20% and reduce waste sent to external disposals by the same amount. Sustainalytics has provided a second-party opinion on the framework.
Owned and managed by the Ferrari family, F.I.S. researches, develops, produces, and distributes active pharmaceutical ingredients.
