Actavis gets commitment for bridge, term loans, notes to acquire Forest

By Toni Weeks

San Luis Obispo, Calif., Feb. 19 - Actavis plc entered into a commitment letter on Feb. 17 with Bank of America, NA, Mizuho Bank, Ltd., Mizuho Securities USA Inc. and BofA Merrill Lynch to fund the cash portion of its merger with Forest Laboratories, Inc., according to an 8-K filing with the Securities and Exchange Commission.

Under the agreement, the lenders will finance (i) a senior unsecured cash bridge tranche up to $3 billion, (ii) an up to $1.75 billion senior unsecured five-year term loan, (iii) up to $2.25 billion in gross proceeds from the issuance and sale of senior unsecured notes and (iv) if the credit documentation for the five-year term loan does not become effective and/or the notes are not issued and sold, up to $4 billion of loans under a senior unsecured bridge facility.

Proceeds will be used to finance the merger and fees and expenses related to the merger.

Actavis will also amend and restate its existing term loans and revolvers to modify the covenants, adjust the maximum consolidated leverage covenant, and to extend the maturity of Actavis' revolver to Sept. 16, 2018 from Sept. 16, 2017.

Merrill Lynch, Pierce, Fenner & Smith Inc. and Mizuho Bank will be lead arrangers and bookrunners for all of the new bank facilities, Bank of America, NA will be administration agent and Mizuho Bank, Ltd. will be syndication agent.

For the $4 billion bridge loan, the interest rate will be between Libor plus 100 basis points and Libor plus 175 bps, depending on the debt rating. After 90 days it will step up by 50 bps, after 180 days by a further 50 bps and after 270 days by 50 bps more for a total of 150 bps. The will also be a duration fee of 50 bps payable after 90 days, 100 bps after 180 days and 150 bps after 270 days.

The bridge loan will mature after 364 days from closing.

The $3 billion cash bridge tranche will mature after 60 days. This tranche and the $1.75 billion five-year term loan will have an interest rate of Libor plus 112.5 bps to Libor plus 187.5 bps, depending on the debt rating. The 60-day loan will not amortize but the five-year borrowing will require quarterly payments of 2.5% of the original principal amount.

Actavis is a pharmaceutical company with headquarters in Dublin.

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