Fresenius Kabi plans $1.985 billion equivalent facility for purchase of APP Pharmaceuticals

By Sara Rosenberg and Paul A. Harris

New York, July 7 - Fresenius Kabi is planning on getting a new roughly $1.985 billion equivalent credit facility to help fund its acquisition of APP Pharmaceuticals Inc., according to a market source.

Deutsche Bank, Credit Suisse and JPMorgan are the lead banks on the deal, with Deutsche Bank the global coordinator.

The facility is estimated to include a €150 million revolver, a $900 million term loan A and an $850 million term loan B, the source said.

Other financing for the transaction will come from about $1.5 billion equivalent of senior notes and equity, with the plan being to minimize the impact on parent company Fresenius SE's credit ratings.

Under the agreement, Fresenius Kabi will purchase APP for $23 per share and a registered and tradeable contingent value right that could deliver up to $6 per share, payable in 2011, if APP exceeds a cumulative adjusted EBITDA target for 2008 to 2010.

Based on the cash purchase price, the transaction values the fully diluted equity capital of APP at about $3.7 billion, and with the contingent value right, if fully realized, at a value of $4.6 billion.

Fresenius will also assume all of APP's outstanding debt, which totals about $940 million, net of cash; so, in total the consideration for the acquisition could be up to $5.6 billion.

In 2007, APP achieved sales of $647 million and an adjusted EBITDA of $253 million. The company's latest published guidance for 2008 forecasts sales in a range of $730 million to $750 million and an adjusted EBITDA in a range of $285 million to $300 million.

Through the acquisition of APP, Fresenius Kabi will enter the U.S. pharmaceuticals market.

The transaction is expected to close at the end of 2008 or beginning of 2009, subject to certain conditions, including regulatory approvals, and approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Fresenius Kabi is a Bad Homburg, Germany, infusion therapy and clinical nutrition company. APP is a Schaumburg, Ill., hospital-based injectable pharmaceutical company.

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