Warner Chilcott $2.75 billion credit facility to launch on Tuesday

By Sara Rosenberg

New York, Sept. 25 - Warner Chilcott plc has scheduled a bank meeting for Tuesday to launch general syndication of its up to $2.75 billion senior secured credit facility (BB+), according to a market source.

Bank of America and Credit Suisse are the co-lead arrangers on the deal. Bookrunners are Bank of America, Credit Suisse, Barclays, Citigroup, JPMorgan and Morgan Stanley. Credit Suisse is the administrative agent.

Warner Chilcott's credit facility, as outlined by a commitment letter filed with the Securities and Exchange Commission, consists of a $250 million five-year revolver priced at Libor plus 350 basis points, a $1 billion five-year term loan A priced at Libor plus 350 bps and a $1.5 billion 51/2-year term loan B priced at Libor plus 375 bps.

All tranches carry a 2.5% Libor floor.

Up to $350 million of the term loan A and/or the term loan B can be available as a 180-day delayed-draw loan. If the delayed-draw is not needed, the company expects to raise a total of $2.15 billion of term loan A and term loan B debt, as opposed to $2.5 billion.

The revolver has a 75 bps commitment fee and the delayed-draw term loan commitment fee will be half of the drawn spread.

According to the commitment letter, the term loan A and term loan B are expected to be offered to lenders at an original issue discount of 98. Market rumor, however, is that the original issue discount on the term loan B may be talked at 981/2.

Proceeds will be used to help fund the acquisition of Procter & Gamble Co.'s pharmaceuticals business.

Other funds for the acquisition will come from senior unsecured notes. The notes were initially expected to be sized at $1.4 billion, but may end up being $450 million as a result of Warner Chilcott's sale of exclusive product licensing rights in the United States to its topical psoriasis treatments Taclonex, Taclonex Scalp, Dovonex to LEO Pharma for $1 billion.

LEO Pharma is paying $1 billion in cash for the assets and Warner Chilcott expects its net cash proceeds from the sale to be around $980 million.

Warner Chilcott plans on using $950 million of the net proceeds to repay the $480 million balance outstanding under its existing credit facility in help fund the pharmaceuticals business acquisition.

The senior unsecured notes are backed by a commitment for a $1.4 billion one-year bridge loan priced at Libor plus 800 basis points with a 2.5% Libor floor. The spread increases by 50 bps after each three-month period.

The acquisition may close by the end of October. Closing is subject to regulatory approvals, the receipt of proceeds of the financing, the delivery of audited financial statements for the pharmaceuticals business and other customary conditions.

Warner Chilcott is a Rockaway, N.J.-based specialty pharmaceutical company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.