Valeant Pharmaceuticals’ term debt rebound continues; ON Semiconductor loan on deck

By Sara Rosenberg

New York, March 2 – Valeant Pharmaceuticals International Inc.’s term loans climbed higher with the generally stronger secondary market on Wednesday, bringing the debt closer to levels that were seen prior to investigations news hitting early this week.

Moving to the primary market, ON Semiconductor Corp. is getting ready to present its new deal to perspective investors on Thursday morning.

Valeant recouping losses

Valeant Pharmaceuticals’ term loan E and term loan F gained in trading on Wednesday to 93 bid, 94 offered on the better market tone felt throughout the secondary and possibly because some fear may be subsiding over recent chatter about investigations into the company, according to a trader.

By comparison, on Tuesday, the loans closed out the day at 92 bid, 92¾ offered, on Monday the loans were quoted at 90½ bid, 92 offered and on Friday the loans were 95¼ bid, 95½ offered, the trader said.

As previously reported, the drop in levels on Monday came after reports emerged that the company is under investigation by the Securities and Exchange Commission, U.S. Attorney’s offices and Congress and that a subpoena has been received from the SEC.

Last week, the company disclosed potential misstatements related to Philidor, saying in a release that it believes about $58 million of net revenues previously recognized in the second half of 2014 should not have been recognized upon delivery of product to Philidor.

Valeant, a Laval, Quebec-based specialty pharmaceutical company, also said last week, and again on Monday, that it expects to delay filing its 2015 10-K pending completion of the review of related accounting matters and the ongoing assessment of the impact on financial reporting and internal controls.

ON Semiconductor launch nears

Switching to the new deal front, ON Semiconductor is on deck to hold its bank meeting at 10 a.m. ET in New York on Thursday to launch a $2 billion seven-year covenant-light term loan B.

As reported earlier this week, the company’s $2.4 billion credit facility (Ba1/BB) also includes a $400 million five-year revolver.

Proceeds will be used to help fund the acquisition of Fairchild Semiconductor International Inc. for $20.00 per share in an all cash transaction valued at about $2.4 billion.

The credit facility commitment letter filed with the Securities and Exchange Commission last year outlined the credit facility as a $2.4 billion seven-year covenant-light term loan B, and a $300 million five-year revolver with an option to increase by $200 million.

Being that the company is now planning on issuing $400 million of senior unsecured notes, the term loan B is coming at a smaller size than initially expected.

ON Semiconductor leads

Deutsche Bank Securities Inc., Bank of America Merrill Lynch, HSBC Securities (USA) Inc. and SMBC are leading ON Semiconductor’s debt financing.

Official price talk on the term loan B has not yet been released, but the commitment letter filed with the SEC in November said expected terms on the B loan were Libor plus 350 basis points with a 0.75% Libor floor, an original issue discount of 99 and 101 soft call protection for six months.

Commitments for the credit facility are due on March 16.

Closing on the acquisition is expected in the second quarter.

ON Semiconductor is a Phoenix-based semiconductor company. Fairchild Semiconductor is a San Jose, Calif.-based semiconductor company.

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