Asklepios Kliniken takes advantage of positive interest rate environment and places promissory note loan of EUR 580 million

The Asklepios Group has successfully placed a promissory note loan with a volume of EUR 580 million in August, thereby securing positive long-term conditions for the company’s further financing. Driven by strong demand, the issue was oversubscribed several times over. As a result the originally intended issue volume of EUR 200 million was stepped up to a total of EUR 580 million.

In addition to savings, commercial and cooperative banks, the issue also attracted institutional and international investors. Asklepios Kliniken’s diversified base of banks and investors has therefore broadened to more than 250 institutional names in Germany and abroad.

As part of the placement, the securities were issued in tranches of five, seven, 10, 12 and 15 years, with both fixed and floating-rate interest. The tranches maturing in seven and 10 years accounted for the bulk of the issue, giving the promissory note loan an average term of eight years. Asklepios will then be able to further optimise the already balanced maturity profile of its liabilities. At the same time, the favourable conditions, which are significantly below the level of previous transactions, are a boost to the company’s earnings power.

The issuer of the promissory note loan is Asklepios Kliniken GmbH, the Hamburg-based holding company of the Asklepios Group. For several years the hospital operator has been consolidating its financing at Group level in order to benefit from its strong positioning as one of the leading healthcare groups in its financing as well.

The funds generated with the promissory note loan will be used for general corporate and growth finance in addition to favourable refinancing. Some of the Group’s more expensive financing will be scaled back. Existing promissory note loan investors also took advantage of the “amend & extend” offer to swap their holdings. As a result, notes already issued were converted for new securities with better conditions and longer terms.

Safeguarding flexibility with a long-term outlook

Stephan Leonhard, Deputy Chairman and CFO of the Asklepios Group, commented: “The multiple oversubscription and the high issue volume placed are clear evidence of the confidence shared by old and new investors alike in our sustainable business model. The promissory note loan, with the various innovative elements of this transaction, is a perfect fit for our strategy of a broad mix of financing. The aim of this is to ensure long-term security in financing coupled with flexibility and good options for financing. In addition to cutting our average costs of capital, this also guarantees that we have the financial leeway to implement our corporate strategy.”

Along with the traditionally conservative financing structure, one of the main reasons given by backers for investors’ willingness to subscribe and their extreme confidence in the Asklepios Group is the secure, long-term cash flows in particular entailed by its business model. “We are proud that around 40% of the issue volume was subscribed by existing investors,” added Stephan Leonhard.

“With a volume of more than EUR 580 million, the Asklepios Group has successfully concluded the biggest financing transaction in its 30-year history, and probably the largest ever promissory note loan issue in the hospital sector.“ ”We have therefore passed another key milestone in the optimisation of our financing structure,” said Ilmarin Schietzel, Head of Strategic Financial Development & Capital Market Projects, of the transaction.

The placement was managed by Bayerische Landesbank, BNP Paribas, Hessische Landesbank and Crédit Agricole with Allen & Overy serving as legal counsel.

About Asklepios

The healthcare group Asklepios Kliniken GmbH is one of the leading private operators of hospitals and healthcare facilities in Germany. The hospital group is known for highly qualified patient care with a clear commitment to medical quality, social responsibility and innovation. The company pursues a responsible and sustainable growth strategy geared towards high quality and innovation. Asklepios has been performing dynamically on this basis since it was founded 30 years ago. The Group currently has around 150 healthcare facilities throughout Germany and employs more than 45,000 people. Approximately 2.2 million patients were treated in Asklepios Group facilities in the 2014 financial year.