LabCorp enters into 60-day $400 million bridge loan for Covance buy

By Toni Weeks

San Luis Obispo, Calif., Feb. 19 – Laboratory Corp. of America Holdings entered into a 60-day $400 million term loan bridge credit facility on Feb. 13 with Bank of America, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

Borrowings bear interest at Libor plus 125 basis points to 200 bps, with the exact margin based on the company’s credit ratings. LabCorp is also required to pay a delayed commitment fee of 25 bps of the principal amount outstanding on the 30th day following closing.

The bridge facility is subject to mandatory prepayment upon the receipt of net cash proceeds from certain asset dispositions, debt issuances or equity issuances.

Under the loan terms, the company must maintain a leverage ratio of no greater than 4.75 to 1.00 with respect to the last day of each fiscal quarter following the closing date.

The bridge facility is permitted to be used to pay all or a portion of the cash consideration of LabCorp’s acquisition of Covance Inc., which was completed on Feb. 19. According to the filing, the full amount under the bridge loan was advanced at closing.

Burlington, N.C.-based LabCorp develops diagnostic technologies through genomic testing. Covance, whose headquarters have been combined with LabCorp’s, is a drug development services company.

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