HEALTHCARE: GRFSM: Accounts Discrepancy Appears Negative

Grifols (GRFSM: WD/B/B- neg) reportedly looking at EUR400m adjustment in its Shanghai-RAAS business. The sale of a stake in this (to Haier Group) is instrumental in satisfying 2025 refi events. Current revolvers appear to have been locked down, alongside one of the two 2025 refi events but this must be taken negatively.

• The firm has recently raised private debt to refi current revolvers (4-Jun, EUR300m), and placed senior secured debt (EUR1bn) in April to refi the May-25 bond (GRFSM 3.2% 05/01/25).  This does still leave GRF SM 1.625% 02/15/25 outstanding (EUR837.9m left).
• The S-RAAS sale was slated to raise as much as USD1.7bn, so some form of adjustment appears likely, in our view. It is positive that, unless the price is more than halved, at least it does cover the above outstanding event, we estimate.
• “Grifols’ New Auditor Discovers Non-Cash Accounting Discrepancy” - BBG