Mylan to cut leverage to 3.5x, pay some 2018, 2019 debt with EBITDA

By Devika Patel

Knoxville, Tenn., April 11 – Mylan Inc. plans to reduce its leverage ratio to below 3.5x in 2018 by growing its EBITDA, which in turn will also be used to pay down debt.

The company has repaid some of its 2018 and 2019 debt and plans to pay down the remainder of that debt through the anticipated expanded EBITDA.

“Following the Meda acquisition, our leverage ratio was 3.8x EBITDA, still well below our covenant ratio and what we’ve said is as we move through 2018, we fully expect that to come down to below 3.5x leverage ratio,” chief financial officer Kenneth S. Parks said on the company’s investor day conference call on Wednesday.

The company has refinanced some 2018 and 2019 debt and plans to pay down the remaining 2018 and 2019 debt from EBITDA, which it plans to grow to help reduce leverage.

“With this strong capital structure and strong relationships with capital markets, we just finished a refinancing, or an extension, of maturities of some of our obligations that are coming due in 2018 and 2019, pushing them out, taking the opportunity to kind of balance out those maturity walls or those maturity levels, at the same time retaining some obligations in 2018 and 2019 that we will, and fully intend to, pay down as we grow that EBITDA to bring that leverage ratio down because leverage ratio reduction will come not only from debt paydown but also from EBITDA expansion,” Parks said.

The company acquired Meda AB (publ.) on Aug. 5, 2016 through a tender offer consisting of a combination of cash and Mylan shares for $9.9 billion. The cash portion was funded through a new bridge credit facility arranged by Deutsche Bank Securities Inc. and Goldman Sachs & Co., taking the company up to 3.8x debt-to-adjusted EBITDA post-close.

On March 28, Mylan sold $1.5 billion of senior notes (Baa3/BBB-/BBB-) in two tranches.

The company priced $750 million of 4.55% 10-year notes at a spread of Treasuries plus 180 basis points, on the tight side of guidance in the Treasuries plus 185 bps spread area.

Mylan sold $750 million of 5.2% 30-year notes at a Treasuries plus 220 bps spread. Price guidance on the notes was in the Treasuries plus 225 bps area.

Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the bookrunners.

The notes will be guaranteed by parent holding company, Mylan, NV.

Proceeds were earmarked to refinance existing debt.

Mylan is a pharmaceuticals company with principal executive offices in Hatfield, England and global headquarters in Canonsburg, Pa.

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