Deutsche Bank Ditches Debt Sale for German Opioid-Maker

Deutsche Bank AG has scrapped its plan to sell hundreds of millions of euros of debt for German pharmaceutical company Gruenenthal GmbH due to a lack of interest from investors, according to people familiar with the matter.

The loan was intended to replace some of the company’s existing financing. The family-owned business, which makes painkillers including opioid drugs such as Tramadol, had unsecured term loans and Schuldschein worth 935 million euros ($1.13 billion) due to mature this year, Bloomberg data show.

Deutsche Bank had approached potential investors to gauge interest for the financing but failed to attract sufficient demand to sell the deal, the people said. Fund managers are cautious about taking exposure to a company that makes opioid products due to the risk these products carry of addiction and abuse, they added.

Gruenenthal has agreed instead to extend a 535 million-euro term loan facility with its bank lenders, it said in a statement on Friday. The debt extension was agreed following its acquisition of the European rights of Crestor, a treatment to lower cholesterol, in February, the company said.

A spokesperson for Deutsche Bank declined to comment. A company spokesperson did not respond to a request for comment.

The bank’s plan to sell the debt came amid growing pressure on European fund managers from their end investors to show they are responsible lenders.

Companies’ environmental impact is a key focus, as seen in the European Central Bank’s plans announced yesterday to decarbonize its balance sheet, but fund managers of leveraged loan portfolios are also focused on social and governance concerns.

Investors acknowledge that pain medication has important social benefits, but some are wary of the sector as a whole having seen litigation and bankruptcy cases among drugmakers in the U.S. such as Mallinckrodt Plc.

Gruenenthal on Feb. 2 removed some of its Palexia painkiller from the market after several batches of the medication were found to be contaminated with bacteria.

The affected batches hold solutions with 20mg and 4mg of the drug, dosages meant for children. Gruenenthal generated 284.6 million euros in revenue with Palexia in 2019, or 20% of its total sales.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.