Invitrogen filling up fast; Fresenius Kabi sets Libor floor; LCDX heads higher

By Sara Rosenberg

New York, Sept. 5 - Invitrogen Corp. just held a retail bank meeting on Friday to launch its credit facility, but the deal is heard to already be going quite well as a result of early round commitments, and Fresenius Kabi revealed the Libor floor on its upcoming deal.

Over in the secondary, LCDX 10 was stronger on the day as stocks were mostly better, and the cash market in general was unchanged to a touch lower in light volume.

Invitrogen's $2.65 billion senior secured credit facility (BBB-/BBB-) is already moving along nicely in terms of syndication despite the fact that the retail launch just took place on Friday, with sources saying that the senior managing agents round apparently garnered some nice attention from lenders.

One source said he heard that the senior managing agents' syndication was good, early indications were good and there are definitely orders in the book.

According to a second source, the banks actually said at the retail meeting that the deal is "going extremely well" and then they thanked the people in the room who already committed.

The source then found out later that the term loan B is already oversubscribed and the term loan A probably has somewhere in the area of $100 million to $200 million more to go before being fully syndicated.

Basically, the banks are pretty much confident that the deal is all wrapped up, the source remarked, adding that based on demand, the banks can probably move some funds from the term loan A into the term loan B if they wanted to.

The senior managing agents round on the deal began back in July.

Invitrogen's facility consists of a $900 million term loan B talked at Libor plus 300 basis points with a 3% Libor floor and an original issue discount of 98, a $1.5 billion term loan A talked at Libor plus 250 bps and a $250 million revolver talked at Libor plus 250 bps.

Covenants include total leverage that opens at 4.25 times and steps down to 3.0 times, and a fixed-charge coverage ratio of 1.75 times.

Commitments from lenders are due on Sept. 17.

Bank of America, UBS and Morgan Stanley are the joint lead arrangers and joint bookrunners on the deal, with Bank of America the left lead and administrative agent, and UBS and Morgan Stanley the co-syndication agents.

Proceeds will be used to help fund the acquisition of Applied Biosystems, help repay all of Invitrogen's debt, other than its convertible notes and certain other exceptions, and provide for ongoing working capital and general corporate purposes of the combined company.

Under the agreement, Invitrogen is buying Applied Biosystems from Applera Corp. in a cash and stock transaction valued at $6.7 billion.

The transaction is targeted to close in the fall, subject to approval by Invitrogen and Applera-Applied Biosystems shareholders and the satisfaction of customary closing conditions, completion of the previously filed and announced separation of Applera's Celera group, and regulatory approvals. It is not subject to financing.

On July 1, Applera announced that it completed the separation of its Celera business and that the remaining Applera business, which is what Invitrogen is purchasing, changed its name to Applied Biosystems.

Following the close of the transaction, the combined company will be named Applied Biosystems, Inc. and will have its corporate headquarters in Carlsbad, Calif.

Invitrogen is a provider of life science technologies for disease research, drug discovery and commercial bioproduction. Applied Biosystems is a developer and marketer of instrument-based systems, consumables, software and services.

Fresenius Libor floor emerges

Fresenius Kabi disclosed that its soon to be launched credit facility is going to carry a Libor floor of 3.25%, according to a market source.

The $2.45 billion senior credit facility (Baa2) consists of a $450 million five-year revolver talked at Libor plus 287.5 bps, a $1 billion five-year term loan A talked at Libor plus 287.5 bps and a $1 billion six-year term loan B talked at Libor plus 350 bps.

A management presentation and conference call will take place in Frankfurt on Monday to launch the deal to overseas investors and in New York on Wednesday to launch the deal to U.S. investors.

Commitments are due from lenders on Sept. 22.

When timing was announced on Thursday, news emerged that the structure on the facility had been changed as a result of strong demand during the senior managing agents round.

Under the original structure, the term loan A was expected to be sized at $900 million and the term loan B was expected to be sized at $850 million.

The additional term loan funds were taken out of the bridge loan commitment, which was revised to $1.3 billion from $1.65 billion. This bridge financing could be replaced by high-yield financing opportunities.

Fresenius said in August that during the senior managing agents phase of syndication, 20 of its key relationship banks from Europe, North America and Japan, acting as mandated lead arrangers and joint lead arrangers, provided strong commitments towards the deal, oversubscribing the target amount.

Deutsche Bank, Credit Suisse and JPMorgan are the senior mandated lead arrangers on the credit facility, with Deutsche Bank the global coordinator.

The revolver has $200 million of uncommitted availability. Of the revolver amount, $150 million will be made available to APP Pharmaceuticals Inc. and $300 million, along with the $200 million uncommitted, will be made available to a financing subsidiary of Fresenius.

Financial covenants under the facility include a consolidated leverage ratio, a consolidated fixed-charge coverage ratio, an interest expense coverage ratio and limits amounts spent on capital expenditure.

Proceeds from the facility, along with the bridge loan, will be used to help fund the acquisition of APP Pharmaceuticals, refinance APP's existing senior credit facility, and for general corporate and working capital purposes.

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.

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.

LCDX rises

LCDX 10 gained some ground in sympathy with equities during Friday's session, while the cash market was flat to slightly down on the day with not much trading activity taking place, according to a trader.

The index was quoted at 97.25 bid, 97.35 offered, up from Thursday's levels of 97 bid, 97.10 offered, the trader said.

Dow Jones Industrial Average closed up 32.73 points, or 0.29%, S&P 500 closed up 5.48 points, or 0.44%, and NYSE closed up 25.51 points, or 0.32%. Nasdaq, however, closed marginally down, dropping 3.16 points, or 0.14%, on the day.

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