China Medical (CMED) new issue 08/14/08

$150m (22.5m) sen unsec cb coming from CS/MS. Terms: 5yr, 3.75%-4.25% up 20-25%, pctn. Brw-fac. UOP=gcp/acq. $1.5B med supply co (now sell higher margin diagnostic reagents rather than non-recurring equipment). Grow thru acq (used $115m cash FY08) w/more to come. LTM EBITDA and FCF = 76/62m resp. lev 3.9x co competes against BEC, Roche, J&Jetc in some mkts. We use L+550 for 3.5% ’11 3.5 yr sr-sub (low CS01), so we’ll use L+700 for 5 yr sen cb. ADV=low 620k w/75% delta listed indic 48 iv bid (low OI). 3yr 90d 5/10ile – 50/35%. We’ll discount 5 yr, low ADV & mkt cap to 40 vol. Thry = 104.5/106.5/108.5. Brw is 150bp away from facility so will be secondary away from lead. Stk downside & lead support always concern us so get rewarded. BUY on mid/cheaps only.

By convertarb, on August 14, 2008 at 5:03 pm, under Convert New Issue Analysis. No Comments
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