Mallinckrodt talks $1.3 billion term loan at Libor plus 275 to 300 bps

New York, Feb. 20 - Mallinckrodt plc launched its new $1.3 billion seven-year covenant-light term loan B with talk of Libor plus 275 to 300 basis points on Thursday, according to a market source.

The loan is talked at 99.5 and has a floor of 75 bps for Libor. There is a soft call at 101 for six months.

Price talk emerged with the launch of a new credit facility (Ba3/BB+) at a bank meeting Thursday in New York.

The facility also includes a $250 million five-year revolver.

Deutsche Bank Securities Inc. is the lead bank on the deal.

The deadline for commitments is March 5.

As previously reported, amortization on the B loan is 1% per annum, the source continued.

Proceeds will be used to help fund the acquisition of Cadence Pharmaceuticals Inc. for $14.00 per share in cash, or about $1.3 billion on a fully diluted basis.

Other funds for the transaction will come from cash on hand.

Closing is expected in mid-to late March, subject to customary conditions, the tender of a majority of Cadence Pharmaceuticals' shares and the expiration or termination of the waiting period under the Hart Scott Rodino Antitrust Improvements Act.

Mallinckrodt is a Dublin-based specialty pharmaceutical and medical imaging business. Cadence Pharmaceuticals is a San Diego-based biopharmaceutical company focused on commercializing products principally for use in the hospital setting.

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