Hologic shuffles $3.8 billion loan, notes for Gen-Probe purchase

By Susanna Moon

Chicago, June 29 - Hologic Inc. will finance its acquisition of Gen-Probe Inc. with a $3.05 billion credit facility and $750 million of senior notes, according to an investor presentation filed with the Securities and Exchange Commission.

The financing consists of a $300 million revolving credit facility, which is expected to be unused at closing, a $1 billion term loan A and $1.75 billion term loan B.

The notes issue was upsized from $500 million and the term loan B was downsized from $2 billion.

As previously reported, the company discussed details of the financing in an 8-K filing with the SEC on May 1.

The allocation of the $3.8 billion among these financings was subject to adjustment, including in response to prevailing market conditions, the filing noted.

Pricing on the revolver and term loan A was expected to be Libor plus 275 basis points, Libor plus 287.5 bps or Libor plus 300 bps depending on ratings at close, and pricing on the term loan B is expected at Libor plus 350 bps with a 1% Libor floor and there is 101 soft call protection for one year.

The revolver unused fee was expected to be 50 bps with a step-down to 37.5 bps based on leverage.

Included in the credit facility is a $500 million accordion feature that was subject to conditions.

Amortization on the term loan A is 5% in years one and two, 10% in year three and 20% in years four and five. The term loan B amortizes at a rate of 1% per annum.

Financial covenants are minimum interest coverage and maximum total net leverage ratios.

Goldman Sachs & Co. is leading the debt financing.

Backing the notes is a commitment for a $500 million senior increasing rate loan with pricing of Libor plus 575 bps, Libor plus 600 bps or Libor plus 625 bps depending on ratings at close. The spread will increase by 50 bps every three months until it hits a cap. There is a 1.25% Libor floor.

Under the agreement, Gen-Probe is being purchased for $82.75 per share in cash, or a total enterprise value of about $3.7 billion.

Other funds for the transaction will come from available cash.

Closing is expected in the second half of the year, subject to approval of Gen-Probe's shareholders, expiration of Hart-Scott-Rodino Antitrust Improvements Act of 1976 and necessary foreign clearances.

The combined company will have pro forma revenues of around $2.4 billion and adjusted EBITDA of $822 million, excluding synergies.

Pro forma net leverage will be 5.3 times, but with expected significant cash flow, that number should be below 5.0 times by fiscal year-end. And, it is anticipated that leverage will return to pre-transaction levels within three years.

Hologic is a Bedford, Mass.-based developer, manufacturer and supplier of diagnostics products, medical imaging systems and surgical products for the health care needs of women.

Gen-Probe is a San Diego-based developer, manufacturer and marketer of molecular diagnostic products and services that are used primarily to diagnose human diseases, screen donated human blood and ensure transplant compatibility.

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