Competition for DORC Heats Up as Sponsors Look for 7.5% PIK

Reporting: Maryna Irkliyenko, Oscar Laurikka, Lucia Camblor Debt funds and banks are in fray to provide financing to support the potential buyout of medical technology company Dutch Ophthalmic Research Center, or DORC, ahead of nonbinding offers in November, sources told Reorg. Sponsors are looking for additional PIK financing on top of just over 4x of senior debt, the pricing of which dropped to 2nd lien level causing some lenders to pass, sources said. With price talk of Euribor +7.5% on the PIK tranche, some potential providers feel that they would not be adequately compensated for their position in the capital structure, sources added. Debt funds are pitching unitranche at up to 5.5x and pricing in the low-6% region, with an additional turn of PIK and a committed acquisition facility, while banks are pitching just over 4x all senior with an additional 1.5x-2x of PIK financing touted, sources said. Some sponsors are also pushing for cov-lite but potential lenders are considering whether this would be appropriate given the size of the deal, the sources said. The debt package will be between €350 million and €400 million, including a committed acquisition facility. DORC is being marketed off EBITDA of between €50 million[...]