Charles River plans $1.25 billion credit facility for WuXi purchase

By Sara Rosenberg

New York, April 26 - Charles River Laboratories International Inc. has received a commitment for a $1.25 billion senior secured credit facility to help fund its acquisition of WuXi PharmaTech Inc., according to an 8-K filed with the Securities and Exchange Commission on Monday.

JPMorgan and Bank of America are the lead banks on the deal.

The facility consists of a $1 billion five-year term loan and a $250 million five-year revolver.

Pricing on the term loan and the revolver will be based on leverage. If the leverage ratio is 2.75 times, pricing is Libor plus 275 basis points. If the ratio is 2.0 times to 2.75 times, pricing is Libor plus 250 bps. If the ratio is 1.25 times to 2.0 times, pricing is Libor plus 225 bps, and if the ratio is less than 1.25 times, pricing is Libor plus 200 bps.

The commitment fee on the revolver can range from 25 bps to 50 bps based on leverage.

Financial covenants include a minimum fixed-charge coverage ratio and a maximum total leverage ratio of 3.50:1.00, with step-downs to be agreed upon.

Amortization on the term loan is 5% in year one, 10% in year two, 15% in year three, 20% in year four and 50% in year five.

There is a $250 million accordion feature.

Under the agreement, the total consideration to be paid will be $21.25 per WuXi American Depositary Share. Each WuXi share will be exchanged for $11.25 in cash and $10 of Charles River common stock determined by an exchange ratio. The transaction is valued at $1.6 billion.

Adjusted combined leverage will be 3.3 times.

Closing is expected by the fourth quarter, subject to approval by each company's shareholders and the satisfaction of customary conditions and regulatory approvals.

Charles River is a Wilmington, Mass.-based provider of research models and associated services and of preclinical drug development services. WuXi is a China-based drug research and development outsourcing company.

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