Alkermes plans $450 million term loan for merger with Elan Drug

By Sara Rosenberg

New York, May 9 - Alkermes Inc. has received a commitment for a $450 million term loan to help fund its merger with Elan Drug Technologies to create Alkermes plc, company officials said in a conference call on Monday.

Morgan Stanley & Co. and HSBC are the lead banks on the deal.

Under the merger agreement, Elan Corp. plc will receive $500 million in cash and 31.9 million ordinary shares of Alkermes plc common stock. Also, existing shareholders of Alkermes Inc. will receive one ordinary share of Alkermes plc in exchange for each share of Alkermes Inc. they own at the time of the merger.

The cash and stock transaction is valued at about $960 million.

On a trailing 12-month basis as of March 31, the combined company would have had pro forma revenues of roughly $450 million and adjusted EBITDA of $80 million.

Pro forma debt to EBITDA will be 4.6 times and net debt to adjusted EBITDA will be 2.5 times. Officials said in the call that they expect those ratios to improve quickly as EBITDA grows and debt is paid down. Also, cash flows are expected to be sufficient to repay the debt in four to five years.

The transaction is expected to close during the third quarter, subject to approval by Alkermes' stockholders and the satisfaction of customary conditions and regulatory approvals, including antitrust approvals in the U.S.

Alkermes plc will have headquarters in Dublin, Ireland. Alkermes Inc. is a Waltham, Mass.-based biotechnology company. Elan Drug Technologies is an Ireland-based drug delivery business.

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