Prestige details $670 million loan, $290 million notes for acquisition

By Sara Rosenberg

New York, Dec. 27 - Prestige Brands Holdings Inc.'s revealed that it plans to get a $670 million senior secured credit facility and issue $290 million of senior notes to fund the acquisition of 17 over-the-counter GlaxoSmithKline plc brands, according to an 8-K recently filed with the Securities and Exchange Commission.

The facility consists of a $50 million five-year revolver and a $620 million seven-year covenant-light term loan, with both tranches expected to be priced at Libor plus 500 basis points with at least one 25 bps step-down based on first-lien net leverage.

Also, the term loan is expected to include a 1.25% Libor floor and the revolver will have a 50 bps unused fee.

Amortization on the term loan is 1% per annum, with the balance due at maturity.

Financial covenants under the revolver are a maximum consolidated total net leverage ratio and a minimum consolidated net cash interest coverage ratio.

Meanwhile, backing the notes is a commitment for a $290 million one-year senior unsecured bridge loan that is priced at Libor plus 800 bps with a 1.25% Libor floor.

Citigroup Global Markets Inc., Morgan Stanley & Co. LLC and RBC Capital Markets LLC are the lead banks on the debt, with Citi the left lead on the credit facility and Morgan Stanley the left lead on the bonds.

As was previously reported, the credit facility is expected to come to market in January.

In addition to funding the $660 million acquisition, the company will use proceeds from the credit facility and notes to refinance existing bank debt.

The cash purchase price for the GlaxoSmithKline brands will be structured as asset purchases that result in substantial tax benefits, creating an effective purchase price of a total of $535 million.

At close, the company expects its total debt to be $1.15 billion.

Closing is targeted for the first half of 2012, subject to customary legal and regulatory closing conditions, including clearance under the Hart-Scott Rodino Antitrust Improvements Act of 1976, and financing.

Prestige is an Irvington, N.Y.-based marketer of branded consumer products in the over-the-counter health care and household cleaning industries.

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