LabCorp enters into $1 billion revolver, $1 billion term loan facility

By Tali Rackner

Norfolk, Va., Dec. 23 – Laboratory Corp. of America Holdings entered into an up to $1 billion five-year revolving credit facility and a $1 billion five-year term loan on Dec. 19, according to an 8-K filing with the Securities and Exchange Commission.

Bank of America, NA served as the administrative agent on the deal that replaces LabCorp’s existing facility dated Dec. 21, 2011. It is also the swingline lender and letter-of-credit issuer for the revolver.

The revolver may be increased by up to an additional $250 million. It also provides for a subfacility of up to $100 million for swing line borrowings and a subfacility of up to $125 million for issuances of letters of credit.

The term loan credit facility will be advanced in full on the date of the completion of LabCorp’s acquisition of Covance Inc. If the acquisition does not close on or before June 2, 2015, the commitments under the term loan credit facility will automatically terminate.

Interest on the revolver is equal to Libor plus 100 basis points to 160 bps and the commitment fee ranges from 12.5 bps to 40 bps, based on LabCorp’s credit ratings.

When advanced, interest on the term loan is Libor plus 112.5 bps to 200 bps, also based on ratings.

Until the acquisition closing date or the date the term loan credit facility commitments are terminated, whichever is earlier, there is a ticking fee on the unfunded term loan credit facility commitments of 15 bps per annum.

Proceeds from the revolver may be used for general corporate purposes, including working capital, capital expenditures, funding of share repurchases and certain other payments, and acquisitions and other investments. Proceeds from the term loans will be used to pay all or a portion of the cash consideration of the proposed acquisition and to pay related fees and expenses.

On Dec.19, 2014, there were no outstanding borrowings under the revolver and existing letters of credit totaling about $42 million were continued under the facility.

Burlington, N.C.-based LabCorp develops diagnostic technologies through genomic testing. Covance is a Princeton, N.J.-based drug development services company.

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