Par Pharmaceutical plans $450 million facility for Anchen purchase

By Sara Rosenberg

New York, Aug. 24 - Par Pharmaceutical Cos. Inc. plans on getting a new $450 million five-year senior credit facility in connection with its acquisition of Anchen Pharmaceuticals Inc., according to an 8-K filed with the Securities and Exchange Commission on Wednesday.

The facility consists of a $100 million revolver and a $350 million term loan.

J.P. Morgan Securities LLC is the bookrunner and lead arranger on the deal and has committed to provide the entire term loan and up to $22 million of the revolver.

Pricing on the two tranches can range from Libor plus 200 basis points to 300 bps based on leverage, with the initial rate expected to be Libor plus 250 bps.

The revolver has an unused fee that can range from 37.5 bps to 50 bps, also based on leverage.

Amortization on the term loan is 5% in year one, 10% in year two, 15% in year three, 20% in year four and 50% in year five.

There is a $150 million accordion feature.

Financial covenants include a total leverage ratio of not more than 3 to 1 and a fixed-charge coverage ratio of not less than 2 to 1.

Under the agreement, Par Pharmaceutical is buying Anchen, an Irvine, Calif.-based specialty pharmaceutical company focused on developing and commercializing extended release and niche generic products, for $410 million in cash.

In addition to the term loan, funds for the transaction will come from $60 million in cash on hand.

The company's new revolver will be used to replace an existing $75 million revolver.

Closing is expected by the end of the year, subject to customary conditions and approvals.

Par Pharmaceutical is a Woodcliff Lake, N.J.-based specialty pharmaceutical company.

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