Akorn outlines expected pricing on $675 million credit facility

By Sara Rosenberg

New York, Sept. 9 - Akorn Inc. revealed expected pricing on its $675 million senior secured credit facility as it recently filed the debt commitment letter in an SC 13D with the Securities and Exchange Commission.

The $600 million seven-year covenant-light term loan is expected at Libor plus 325 basis points with a 1% Libor floor and 101 soft call protection for six months, and the $75 million five-year ABL revolver is expected at Libor plus 150 bps with a 25 bps unused fee, the filing said.

Amortization on the term loan is 1% per annum.

J.P. Morgan Securities LLC is the lead bank on the deal.

Proceeds will be used to help fund the acquisition of Hi-Tech Pharmacal Co. Inc. for $43.50 per share (about $640 million), and the revolver will be available for working capital and other corporate purposes.

Other funds for the acquisition will come from Hi-Tech cash assumed.

The combined company is expected to have annual revenues in excess of $500 million, and it is anticipated that a strong balance sheet and attractive cash flow will allow the company to pursue continued growth initiatives while paying down debt.

Closing is targeted for the first quarter of 2014, subject to customary conditions, including termination of the waiting period under the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Akorn is a Lake Forest, Ill.-based niche pharmaceutical company engaged in the development, manufacture and marketing of multisource and branded pharmaceuticals with a focus on sterile ophthalmic and injectables. Hi-Tech is an Amityville, N.Y.-based specialty pharmaceutical company developing, manufacturing and marketing generic and branded prescription and over-the-counter products.

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