Valeant plans $7 billion loans, $12.35 billion bonds for Allergan bid

By Sara Rosenberg

New York, June 18 – Valeant Pharmaceuticals International Inc. intends to get $7 billion in term loans and issue $2.75 billion of senior secured notes and $9.6 billion of senior unsecured notes to fund its proposed exchange offer for the common stock of Allergan Inc., according to an SC TO-T filed with the Securities and Exchange Commission on Wednesday.

The bank debt consists of a $750 million incremental five-year term loan A, a $4.25 billion incremental seven-year term loan B and a $2 billion euro equivalent incremental seven-year term loan B.

The term loan A is expected to have pricing of Libor plus 200 basis points, with a step-up to Libor plus 225 bps and a step-down to Libor plus 175 bps based on leverage.

Pricing on the U.S. and euro term loan B is expected at Libor/Euribor plus 325 bps with a 0.75% floor, and the debt will have 101 soft call protection for six months.

Amortization on the term loan A is 5% in year one, 10% in year two, and 20% in years three, four and five, and amortization on the term loan B debt is 1% per annum.

Meanwhile, backing the notes is a commitment for a $2.75 billion one-year secured bridge loan priced at Libor plus 425 bps with a 1% Libor floor and a $9.6 billion one-year unsecured bridge loan priced at Libor plus 550 bps with a 1% Libor floor.

The spread on both bridge loans will increase by 50 bps every 90 days until it hits a specified cap.

In addition, the company has received a commitment for a $1.4 billion bridge loan that will be reduced by the net proceeds from specified asset dispositions.

Pricing on the asset sale bridge loan is Libor plus 500 bps with a 1% Libor floor, and the spread will increase by 25 bps every 90 days until it hits a specified cap.

Barclays, RBC, the Bank of Tokyo-Mitsubishi UFJ Ltd., Deutsche Bank Securities Inc., DNB Markets Inc. and HSBC Securities (USA) Inc. are the joint lead arrangers and bookrunners on the term loans and bridge loans.

Under the proposal, Allergan stockholders would be able to elect to exchange each of their Allergan shares for $72.00 in cash and 0.83 Valeant common shares, or an amount of cash, or a number of Valeant common shares, in each case subject to proration.

The offer, which Valeant is taking directly to Allergan stockholders, is scheduled to expire at 5 p.m. ET on Aug. 15.

“We believe Allergan’s stockholders should have the opportunity to express their views and we are confident that Allergan’s stockholders will support this combination,” said J. Michael Pearson, chairman and chief executive officer, in a news release. “This offer, together with Pershing Square’s ongoing efforts to call a special meeting of Allergan stockholders, is part of Valeant’s clear path to complete a transaction with Allergan.”

Valeant is a specialty pharmaceutical company with U.S. headquarters in Bridgewater, N.J., and international headquarters in Laval, Quebec. Allergan is an Irvine, Calif.-based pharmaceutical company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.