Valeant plans $3.05 billion credit facility for merger with Biovail

By Sara Rosenberg

New York, June 21 - Valeant Pharmaceuticals International Inc. plans on getting a new $3.05 billion credit facility to help fund its merger with Biovail Corp., company officials said in a conference call on Monday.

Goldman Sachs, Morgan Stanley and Jefferies are the lead banks on the deal.

The facility consists of a $2.8 billion term loan and a $250 million revolver.

The company said in the call that it expects strong and growing operating cash flow, which will allow for rapid deleveraging while also providing for future growth.

On a trailing 12-month basis as of March 31, the combined company would have had pro forma revenues of $1.75 billion and pro forma cash flow from operations of $575 million.

Available liquidity of the combined company is anticipated to be in excess of $500 million, including the new revolver.

And, the combined company's debt/total capitalization will be less than 40%.

In connection with the merger, Valeant's existing 7.625% and 8.375% senior unsecured notes will be refinanced.

Funds from the new term loan will be sufficient to finance the merger and the refinancing, officials added in the call.

Under the terms of the agreement, Valeant stockholders will receive a one-time special cash dividend of $16.77 per share immediately prior to closing of the merger and 1.7809 shares of Biovail common stock upon closing of the merger in exchange for each share of Valeant common stock they own.

Upon the completion of the merger, Biovail stockholders will own 50.5% and Valeant stockholders will own 49.5% of the shares of the combined company on a fully diluted basis.

The transaction is expected to close before year-end, subject to Valeant and Biovail stockholder approval and regulatory approvals.

All stockholders of the merged company are expected to receive an additional one-time $1.00 per share special dividend by Dec. 31, 2010.

Aliso Viejo, Calif.-based Valeant and Mississauga, Ont.,-based Biovail are specialty pharmaceutical companies. The combined company will be based in Mississauga and will be named Valeant Pharmaceuticals International Inc.

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