Axcan Holdings to launch $340 million credit facility on Thursday

By Sara Rosenberg

New York, Jan. 25 - Axcan Holdings Inc. is scheduled to hold a bank meeting on Thursday morning to launch a proposed $340 million senior secured credit facility, according to a market source.

Bank of America, RBC Capital Markets, HSBC Securities and Barclays Capital are the joint lead arrangers and bookrunners on the deal.

The facility consists of a $115 million amended and restated revolver and a $225 million six-year term loan, the source said.

Initial pricing on extended revolver commitments due in 2016 is expected to be Libor plus 450 basis points with a 75 bps unused fee, while pricing on the non-extended revolver due Feb. 25, 2014 will be Libor plus 350 bps with a 50 bps unused fee, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

Expected pricing and the Libor floor on the term loan B are still to be determined, the filing said. There will be soft call protection at 101 for one year.

Amortization on the term loan is 1% per year, with the balance due at maturity.

The revolver will have total leverage and interest coverage covenants.

Proceeds from the term loan, along with $225 million of secured notes, $145 million of equity and cash on hand, will be used to fund the acquisition of Eurand NV for $12 per share, or $586.5 million in total on a fully-diluted basis, to repay Eurand's debt, and to repay Axcan's outstanding term loan.

The amended and restated revolver will be used to replace the company's existing revolver. It is expected to be undrawn at close other than for amounts required to finance any original issue discounts and fees and expenses related to the transactions.

Initially, the company had said that it received a commitment for a $445 million bridge loan for the acquisition and was planning on using $160 million of equity.

Axcan is currently tendering for Eurand's shares and that offer will expire on Feb. 3.

The acquisition is subject to a minimum tender of 80% of Eurand shares and receipt of antitrust approval, which has already been obtained.

Axcan is a Mont-Saint-Hilaire, Quebec-based pharmaceutical company focused on the treatment of gastrointestinal disorders. Eurand is an Amsterdam-based specialty pharmaceutical company.

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