Angiotech plans $375 million credit facility, $300 million bonds for American Medical purchase

By Sara Rosenberg

New York, Feb. 1 - Angiotech Pharmaceuticals Inc. plans to obtain an about $375 million credit facility and issue about $300 million of subordinated notes for its acquisition of American Medical Instruments Holdings Inc., company officials said in a conference call Wednesday.

The credit facility is expected to consist of a $300 million term loan and a $75 million revolver.

Credit Suisse and Merrill Lynch have provided the company with the total debt commitment that is for $600 million in senior term loans, but the company anticipates having a final capital structure comprised of 50% term debt and 50% bonds, officials explained.

The company assumes that the debt will have an average interest rate of 7% to 7½%, with the rate veering towards the high end of the assumption if the company opts to do the bond offering.

Following the acquisition, total debt to EBITDA will be 3.6 times, EBITDA to interest will be 4.0 times, debt to equity will be 130%, debt to total capitalization will be 56% and net debt to total capitalization will be 41%.

Debt to EBITDA is anticipated to drop to 3.2 times in 2006, 2.3 times in 2007 and 1.4 times in 2008, with the company hoping to have the senior term loan paid off in full by 2008, only leaving the $300 million of subordinated bonds outstanding.

Under the acquisition agreement, Angiotech has agreed to purchase American Medical for about $785 million in cash, split into about $676 million to American Medical shareholders and $109 million to refinance existing American Medical debt.

In addition to the about $600 million of debt, the company also plans to use about $200 million of cash on hand for acquisition financing.

The transaction is expected to close early in the second quarter, subject to customary closing conditions.

Angiotech Pharmaceuticals is a Vancouver-based specialty pharmaceutical company. American Medical Instruments is a Lake Forest, Ill.-based manufacturer of a variety of single-use medical device products for specialty areas.

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