Cerba’s €5bn debt sale tests who ranks first in bankruptcy
A slice of Cerba Healthcare’s bank debt is for sale as its €5bn restructuring moves toward court supervision.
By The Ledger · · 4 min read
A piece of Cerba Healthcare's revolving credit facility is up for sale, according to people familiar with the matter reported by Bloomberg. The French laboratory operator, backed by private equity firm EQT AB, owes €5 billion ($5.8 billion). It is heading toward court-supervised restructuring to work that debt down.
The sale of that debt slice is not a company raising cash. It is existing lenders exiting before the restructuring locks in who gets paid first. Whoever buys the debt is betting on a specific outcome: that Cerba's labs keep running, that its revenue keeps flowing, and that the restructuring leaves debt-holders with more than they'd get from a straight liquidation. Whoever sells is betting the opposite, or simply wants certainty now over a claim later.
A blood test in Lyon funds a payment in London
Cerba runs medical laboratories across France, Italy, Belgium and beyond, processing blood work, biopsies and diagnostic tests for hospitals and clinics. That is the business generating cash. The debt sitting on top of it, €5 billion, was built up through years of private-equity-backed acquisitions, the standard playbook: buy smaller lab networks, consolidate them, load the combined entity with debt, and refinance as needed. It worked as long as borrowing stayed cheap and earnings kept growing faster than interest payments.
Court-supervised restructuring is the mechanism European companies use when a debt pile outgrows the cash flow supporting it. France's accelerated safeguard procedure, and similar regimes elsewhere in Europe, let a company negotiate new terms with creditors under a judge's oversight, rather than defaulting outright. The result is usually a debt-for-equity swap, a maturity extension, or both, with senior lenders recovering more than junior ones and equity holders often diluted to near zero. EQT, which bought into Cerba as part of a wider consolidation of European diagnostics, would be near the back of that queue if the restructuring wipes out shareholder value.
Selling the revolver now is a bet on the seniority ladder
Revolving credit facilities sit differently from term loans in a company's capital structure. They are typically senior, secured, and designed for short-term liquidity rather than long-term financing. In a restructuring, seniority determines the order of payment: senior secured lenders recover first, unsecured and subordinated creditors take what's left, and equity holders often get nothing. A lender selling its slice of the revolver now is pricing in some discount to face value in exchange for exiting before the restructuring's outcome — the exact recovery rate, the exact new terms — is fixed by a court.
The buyers on the other side are usually distressed-debt specialists: funds that price restructuring risk for a living, buying senior claims at a discount because they expect court-supervised recoveries to land above the price they're paying. That trade only works if the underlying business, in this case a diagnostics network processing millions of tests a year, keeps generating enough cash to service whatever debt survives the restructuring. Bloomberg's reporting does not specify the discount at which the revolver slice is trading, nor which funds are involved. Two figures anchor the story regardless: €5 billion in debt, and $5.8 billion at the current euro-dollar rate reported by Bloomberg.
The people who draw blood are not the people renegotiating it
The catch nobody prices into these deals cleanly: restructuring the balance sheet does not restructure the operations. Cerba's labs still need staff, reagents, and equipment maintenance contracts, all running on cash the restructuring is trying to conserve for creditors. Employees and suppliers are typically the last group consulted and the first group affected if cost-cutting follows debt relief. A successful court-supervised process protects the company as a going concern, which protects jobs in aggregate, but it does so by extracting concessions somewhere: from junior lenders, from equity, or from operating budgets.
The honest question the story leaves open is what recovery rate senior lenders will actually get once the process concludes, and whether that number was already visible to the funds now buying in. Court-supervised restructurings in France typically take months to conclude once filed; Cerba's is still moving toward that stage, not inside it. Until a plan is filed, the discount at which debt trades is a market guess, not a court-tested figure.
What "court-supervised" restructuring actually means here
It means a judge, not just the company and its lenders, will approve or reject the final restructuring plan, giving creditors a formal process to contest terms rather than negotiating entirely in private. It does not mean bankruptcy in the liquidation sense — Cerba's labs are expected to keep operating throughout.
Who bears the cost if the restructuring fails to stick
Senior secured lenders recover first if the process breaks down into liquidation; unsecured creditors and EQT's equity stake absorb losses last, in that order, per standard restructuring seniority.