Endo plans $5 billion of term loan B’s, about $2.8 billion of notes

By Sara Rosenberg

New York, May 21 – Endo International plc plans on getting $5 billion of senior secured term loan B debt and issuing $2,275,000,000 of unsecured senior notes to help fund its acquisition of Par Pharmaceutical Holdings Inc., according to an 8-K filed with the Securities and Exchange Commission on Thursday.

The term loan B debt is split between a $1.5 billion three-year B-1 tranche and a $3.5 billion seven-year B-2 tranche.

Pricing on the term loan B-1 is expected at Libor plus 275 basis points and pricing on the term loan B-2 is expected at Libor plus 325 bps, with both having a 0.75% Libor floor and 101 soft call protection for six months.

Backing the notes is a commitment for a $2,275,000,000 one-year unsecured bridge loan priced at Libor plus 525 bps with step-ups by 50 bps every 90 days until a cap is reached. The debt has a 1% Libor floor.

The company has also received a commitment for a $1 billion one-year asset-sale bridge loan priced at Libor plus 275 bps with step-ups by 50 bps every three months and a 0.75% Libor floor.

Additionally, if an amendment to the company’s existing credit facility is not obtained, the debt commitment provides for a $1 billion five-year revolver priced at Libor plus 250 bps with a 50 bps unused fee.

Deutsche Bank Securities Inc. and Barclays are the joint lead arrangers and bookrunners on the debt, with Deutsche the left lead on the credit facility and asset-sale bridge loan and Barclays the left lead on the unsecured bridge loan.

Post closing, the company’s net leverage ratio is expected in the high fours to low fives.

However, Endo expects that the financing combination provides the ability for it to rapidly delever back to the three to four times net debt to EBITDA range in the 12 to 18 months following the close of the transaction.

Other funds for the transaction will come from cash and an equity offering of around $1.5 billion to $2 billion.

Under the agreement, Par Pharmaceutical is being purchased from TPG in a transaction valued at $8.05 billion, including the assumption of debt.

The purchase price will consist of about 18 million shares of Endo equity and $6.5 billion cash consideration to Par shareholders.

Closing is expected in the second half of this year, subject to regulatory approval in the United States and certain other jurisdictions, as well as other customary conditions.

Endo is a Dublin, Ireland-based specialty pharmaceutical company. Par Pharmaceutical is a Woodcliff, N.J.-based developer, manufacturer and marketer of pharmaceuticals.

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