Endo Health Solutions plans to sell $375 million notes to refinance acquisition-related debt

By Paul A. Harris and Sara Rosenberg

Portland, Ore., Dec. 2 - Endo Health Solutions Inc. plans to sell $375 million of high-yield notes as part of an effort to refinance debt related to its acquisition of Paladin Labs Inc., according to a market source.

The effort also includes $2,225,000,000 of new bank debt. A $375 million term loan B is set to launch at a Wednesday bank meeting.

Deutsche Bank Securities Inc. and RBC Capital Markets are the lead banks on the financing.

Proceeds will be used to repay some of the company's existing debt and fund the early repurchase of its convertible notes due April 2015.

Initially, the company was expected to get a $750 million term loan B, but half of that amount was moved to the bond offering.

Also, the company had received a commitment for a $1.3 billion one-year senior unsecured bridge loan in case its existing notes needed to be taken out, but change-of-control consents were obtained, making the bridge loan unnecessary.

The credit facility and notes are being done in connection with Endo's acquisition of Paladin Labs Inc.

Under the agreement, each of Endo and Paladin will be acquired by a newly formed Irish holding company, New Endo.

Paladin shareholders will receive 1.6331 shares of New Endo stock and C$1.16 in cash, for a value of C$77.00 per share. The stock-and-cash transaction is valued at about $1.6 billion, of which around 98% will be paid in shares of stock.

Current Endo shareholders will receive one share of New Endo for each share of Endo they own at closing.

At closing, current Endo shareholders will own around 77.5% of New Endo, and current Paladin shareholders will own about 22.5% of New Endo.

Closing is expected in the first half of 2014, subject to regulatory approvals in the United States, Canada and South Africa, the approval of both companies' shareholders, the approval of the Superior Court of Quebec, the registration and listing of New Endo shares and customary conditions.

Endo is a Malvern, Pa.-based specialty health care company. Paladin is a Montreal-based specialty pharmaceutical company.

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