Mylan Laboratories gets $4.85 billion facility; $2.85 billion interim facility

By Angela McDaniels

Seattle, Oct. 5 - Mylan Laboratories Inc. finalized the financing package for its acquisition of Merck KGaA's generics business, according to an 8-K filing with the Securities and Exchange Commission.

On Tuesday, the company obtained a $500 million term loan A due 2013, a $2 billion term loan B due 2014 and a €1.13 billion euro term loan due 2014.

The euro term loan was borrowed by subsidiary Mylan Luxembourg 5 Sarl.

Pricing on the U.S. term loans is Libor plus 325 basis points or a Base rate plus 225 bps, at Mylan's option. Pricing on the euro term loan is Euribor plus 275 bps.

The roughly $4.85 billion senior credit facility also includes a $750 million revolving credit facility, which has a $100 million subfacility for letters of credit and a $50 million subfacility for swingline borrowings.

Pricing on the revolver is Libor plus 275 bps or a Base rate plus 175 bps, also at Mylan's option.

The revolver includes a facility fee of 0.5% of the principal amount per year. This fee can decrease to 0.375% per year based on the company's consolidated leverage ratio.

The term loan A has required amortization of $6.25 million per quarter in 2008, $12.5 million per quarter in 2009, $18.5 million per quarter in 2010, $25 million per quarter in 2011, $31.25 million per quarter in 2012 and $31.25 million per quarter in 2013.

The term loan Bs amortize quarterly at the rate of 1% per year beginning in 2008.

There are minimum consolidated interest coverage and maximum consolidated senior leverage covenants.

JPMorgan Chase Bank, NA is administrative agent.

Proceeds were used to pay a portion of Mylan's €4.9 billion acquisition of Merck's generics business, which closed on Tuesday; to refinance Mylan's existing credit facility; and to purchase the company's 5¾% senior notes due 2010 and 6 3/8% senior notes due 2015 under a tender offer.

Plans for the facility were announced in July. At the time, Merrill Lynch, Citigroup and Goldman Sachs were named as lead banks.

Interim credit facility

Mylan also entered into a $2.85 billion interim credit facility due 2017, the proceeds of which went toward the Merck acquisition.

Pricing on the interim term loan is Libor plus 450 bps, with step downs of 50 bps six months after closing and 25 bps every three months after that.

Beginning Oct. 2, 2008, the lenders have the option to convert the interim term loan into exchange notes.

Merrill Lynch Capital Corp. is administrative agent.

Mylan is a Canonsburg, Pa., pharmaceutical company.

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