RETAIL/WHOLESALE

Berlin  -  Europe's leading pharmaceutical trading group Phoenix is close to finish its refinancing. After various opportunities had been taken into account, there probably will be no change in the ownership. Instead of a sale, which had been favoured at an earlier stage, there will be a conversion of debts: According to media reports, the Merckle family is going to inject money into the company, in addition Phoenix could place a corporate bond. The group has debts of 3.5 billion euros.

According to a report by Bloomberg, Merckle will invest another 500 million euros in Phoenix and repay the debts of the Ratiopharm-holding VEM. In late 2008, just a few weeks before his death, Adolf Merckle had diverted 415 million euros from Phoenix to the benefit of VEM. As a result of the debt overload at VEM, Phoenix faced a total loss of its loan and such was made part of the standstill agreement with the Merckle creditor banks.

The sale of Ratiopharm is a „solid base for refinance“, a person familiar with the negotiations says. The banks already agreed to grant new loans with a sum of 2.6 billion euros as early as next month, writes Bloomberg. Eventually, Phoenix would have to divest certain smaller assets worth 200 million euros. An Initial Public Offering (IPO) with 25 per cent of the shares is also not excluded. However, due to the complicated structure in the ownership – a dozen companies hold shares in Phoenix – this could demand a further restructuring in the architecture of the company.

In fact, the Merckle family has time until the end of January 2011 to find a solution for Phoenix. At this date, the standstill agreement will expire. On 90 pages, details on the restructuring loan of 320 million euros or the extension for the repayment of all existing debts are agreed. The trustee agreement, which has 34 pages, provides details about the restructuring and recapitalization as well as the possible disposal of assets.

In April 2009, an expert's opinion of the audit company KPMG had declared Europe's leading pharmaceutical trading company survivable and remediable because of its strong footprint in the European markets, the sustainable corporate development as well its positive results. In 2008/2009 Phoenix generated sales of 21.5 billion euros and a result of 120 million euros. In Germany, Phoenix reported a turnover of 6.3 billion euros and earnings of 500.000 euros.

Patrick Hollstein, Fri, June 18, 2010 10:40am CET