Actavis gets $30.9 billion bridge loan, $5 billion term loan for buyout

By Susanna Moon

Chicago, Dec. 22 – Actavis plc obtained a $1 billion five-year revolving credit loan and guaranty agreement on Dec. 17 with JPMorgan Chase Bank, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

Actavis plc is the ultimate parent; Warner Chilcott Ltd. is the intermediate parent; Actavis Capital Sarl is the borrower; and Actavis, Inc. and Actavis Funding SCS are the subsidiary guarantors.

Interest on the loans will be Libor plus 87.5 basis point to 200 bps, based on the company’s debt rating. The unused fee ranges from 7.5 bps to 25 bps.

The revolver will mature on Dec. 17, 2019.

The revolving agreement replaces Actavis’ $750 million second amended and restated Actavis revolving credit and guaranty agreement dated June 30 with Bank of America, NA as administrative agent.

J.P. Morgan Securities LLC, Mizuho Bank, Ltd. and Wells Fargo Securities, LLC are the joint lead arrangers and joint bookrunners.

J.P. Morgan Europe Ltd. is the London agent. Mizuho Bank, Ltd. and Wells Fargo Bank, NA are the co-syndication agents. Barclays Bank, plc, BNP Paribas, HSBC Bank USA, NA, Sumitomo Mitsui Banking Corp., Bank of Tokyo-Mitsubishi UFJ, Ltd., Royal Bank of Scotland plc and TD Bank, NA are the co-documentation agents.

Bridge loan, term loan

The company also entered into a $30.9 billion 364-day senior unsecured bridge credit agreement on Dec. 17 and a senior unsecured term loan credit agreement with JPMorgan as administrative agent.

The term lenders have committed to provide a tranche of $2.75 billion three-year senior unsecured term loans and a tranche of $2.75 billion five-year senior unsecured term loans.

Proceeds will be used to help finance the cash component of the merger with Allergan, Inc.

Interest on the bridge loans will be Libor plus a spread based on the company’s credit ratings. The margin will be 100 bps to 200 bps until the 90th day after closing, stepping up to 150 bps to 250 bps after that until the 180th day after closing, to 200 bps to 300 bps after that until the 270th day after closing and to 250 bps to 350 bps after that.

Under the bridge loans, there is a non-refundable duration fee of 50 bps, 100 bps and 150 bps payable on the 90th, 180th and 270th day, respectively, after the funding date on the aggregate principal amount of the loans outstanding on that day.

For the term loans, interest will range from Libor plus 100 bps to 200 bps for the three-year loans and from Libor plus 1.125 bps to 2.25 bps for the five-year loans.

The outstanding principal amount of the five-year tranche is payable in equal quarterly installments of 2.5% of the original principal amount of the five-year tranche outstanding on the funding date each quarter prior to the fifth anniversary of the funding date, with the remaining balance payable on the fifth anniversary of the funding date.

Actavis Capital may prepay the loans under each agreement at any time without premium or penalty.

The bridge agreement also requires mandatory commitment reductions with the net cash proceeds of asset sales and recovery events and the gross cash proceeds of debt or equity issuances or if the loans under the bridge agreement have been funded, mandatory prepayments with the net cash proceeds of certain asset sales and recovery events and debt or equity issuances.

J.P. Morgan Securities LLC, Mizuho Bank, Ltd. and Wells Fargo Securities, LLC are the joint lead arrangers and joint bookrunners.

The funding of the loans under the agreements is conditioned on completion of the merger.

Term loan amendment

The company also amended its term loan credit and guaranty agreement on Dec. 17 with Bank of America, NA as administrative agent permit the acquisition of Allergan, according to the 8-K filing.

The company amended the terms to

• Conform the maximum consolidated leverage ratio financial covenant and related terms to the corresponding terms in the term loan credit agreement;

• Permit the assumption of debt of Allergan and its subsidiaries permitted to remain outstanding on the date of completion of the merger;

• Permit liens in existence on the closing date on assets of Allergan and its subsidiaries to the extent the liens are permitted to remain in place on the closing date;

• Modify the covenant to provide subsidiary guarantees; and

• Modify the representations and warranties, affirmative and negative covenants, events of default and assignment provisions to conform to the corresponding provisions in the term loan credit agreement.

More financing background

As previously reported, the company disclosed more details of its planned acquisition financing on Nov. 18, which consisted of a $2.5 billion tranche of three-year senior unsecured term loans, a $2.5 billion tranche of five-year senior unsecured term loans, $22.5 billion from the issuance and sale of senior notes by Actavis Funding SCS, $8.9 billion from the issuance and sale of common equity interests and/or mandatorily convertible preferred equity interests by Actavis and, if cash on hand is not available at closing, a senior unsecured bridge loan totaling $4,698,000,000.

Actavis entered into a commitment letter on Nov. 16 with JPMorgan Chase Bank, NA, J.P. Morgan Securities LLC, Mizuho Bank, Ltd., Wells Fargo Bank, NA and Wells Fargo Securities, LLC.

Actavis is a pharmaceutical company with headquarters in Dublin. Irvine, Calif.-based Allergan is a multi-specialty health-care company.

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