Thermo Fisher obtains $6.5 billion bridge loan, term loan, revolver

By Marisa Wong

Morgantown, W.Va., July 1 – Thermo Fisher Scientific Inc. entered into a $2 billion bridge credit agreement, a $2 billion term loan agreement and a $2.5 billion revolving credit agreement on July 1, according to an 8-K filing with the Securities and Exchange Commission.

JPMorgan Chase Bank, NA is the administrative agent, sole lead arranger and sole bookrunner for the bridge loan and term loan.

Bank of America, NA is the administrative agent for the revolver, with Barclays Bank plc and JPMorgan Chase Bank, NA as syndication agents and Merrill Lynch, Pierce, Fenner & Smith Inc., Barclays Bank plc and JPMorgan Chase Bank, NA as joint lead arrangers and joint bookrunners.

Bridge loan

The $2 billion senior unsecured bridge loan facility has a term of 364 days.

Availability is conditioned on Thermo Fisher’s acquisition of FEI Co. Loan proceeds may be used to fund, in whole or in part, the acquisition, including repayment of FEI’s debt and all or a portion of the costs incurred in connection with the transaction.

Loans will bear interest at Libor plus a margin of 100 basis points to 175 bps, based on the company’s debt ratings.

Beginning on July 25 and continuing through the date on which the loans are advanced, or the bridge commitments are terminated, the company will pay a ticking fee equal to 10 bps to 25 bps based on debt ratings.

The company has also agreed to pay a funding fee equal to 0.5% of the aggregate amounts of the loans funded and a duration fee on each of the 90th, 180th and 270th day after the funding of the loans in an amount equal to 0.5%, 0.75%, and 1%, respectively, of the aggregate amount of the loans outstanding at the time.

The bridge credit agreement requires that the company maintain a consolidated debt to consolidated EBITDA ratio of no greater than 4.5 to 1 for the first two consecutive quarters after the loans are advanced, stepping down to 4.0 to 1 for each fiscal quarter after that, and a minimum interest coverage ratio of 3.0 to 1 as at the last day of any fiscal quarter.

Term loan

The $2 billion term loan facility is a three-year senior unsecured term loan.

Availability is conditioned on the FEI acquisition. Loan proceeds may be used to fund, in whole or in part, the acquisition, including repayment of FEI’s debt and all or a portion of the costs incurred in connection with the transaction.

The principal is to be repaid quarterly at 2.5% during the first four quarters and 5% during the remaining eight quarters, with the balance due at maturity.

Interest is equal to Libor plus a margin of 100 bps to 175 bps, depending on the company’s debt ratings. In addition, the company has agreed to pay a commitment fee of 10 bps to 27.5 bps based on debt ratings.

The term loan agreement requires that the company maintain a consolidated debt to consolidated EBITDA ratio of no greater than 4.5 to 1 for the first two consecutive quarters after the loans are advanced, stepping down to 4.0 to 1 for the two immediately following fiscal quarters and then stepping down to 3.5 to 1 each fiscal quarter after that. After the consolidated leverage ratio has stepped down to 3.5 to 1 and has been tested for at least one quarter, at the company’s election, the permitted leverage ratio may be increased to 4.5 to 1, with the same successive step downs. The term loan agreement also requires a minimum interest coverage ratio of 3.0 to 1 as at the last day of any fiscal quarter.

Revolver

The $2.5 billion revolver is a five-year senior unsecured revolving facility that replaces the company’s existing $1.5 billion five-year revolver.

Proceeds may be used to repay all obligations under the prior facility and for working capital purposes, capital expenditures, acquisitions, repurchases of stock, debentures and other securities, the refinancing of present and future debt and other general corporate purposes.

Borrowings will bear interest at Libor plus 90 bps to 147.5 bps based on the company’s debt ratings. In addition, the company has agreed to pay a facility fee of 10 bps to 27.5 bps based on debt ratings.

The revolving credit agreement requires that the company maintain a consolidated debt to consolidated EBITDA ratio of no greater than 3.5 to 1 as of the last day of any fiscal quarter prior to the closing date of the acquisition. On and after the date that the acquisition closes, the permitted consolidated leverage ratio will be 4.5 to 1 for the first two consecutive quarters, stepping down to 4.0 to 1 for two immediately following fiscal quarters and then stepping down to 3.5 to 1 each fiscal quarter after that. In addition, from and after the earlier of the acquisition closing date and termination of the acquisition, the permitted leverage ratio may be increased to 4.5 to 1, with the same successive step downs. The revolver also requires a minimum interest coverage ratio of 3.0 to 1 as at the last day of any fiscal quarter.

Thermo Fisher is a Waltham, Mass.-based science technology company. FEI, based in Hillsboro, Ore., designs, manufactures and supports a broad range of high-performance microscopy workflow solutions.

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