Organon launches upsized $4.1 billion and €1.25 billion three-part notes, pricing Thursday

By Paul A. Harris

Portland, Ore., April 8 – Organon & Co. launched $4.1 billion and €1.25 billion of high-yield notes in three upsized tranches on Thursday, according to market sources.

An upsized $2.1 billion tranche of seven-year senior secured notes, callable after three years at par plus 50% of the coupon, launched at 4 1/8%, tight to the 4 1/8% to 4¼% talk, and in line with initial talk in the low 4% area. The tranche size increased from $2 billion.

An upsized €1.25 billion tranche of seven-year senior secured notes, callable after three years at par plus 50% of the coupon, launched at 2 7/8%, tight to talk in the 3% area, and to initial talk in the low 3% area. The tranche size increased from $1 billion equivalent, or approximately €850 million.

An upsized $2 billion tranche of 10-year senior unsecured notes, callable after five years at par plus 50% of the coupon, launched at 5 1/8%, tight to the 5 1/8% to 5¼% talk, and well inside of initial talk in the mid-to-high 5% area. The tranche size increased from $1.5 billion.

The overall amount of a resized two-part bank loan deal also increased: The dollar-denominated term loan B was upsized to $3 billion from $1 billion, while the euro-denominated term loan B was downsized to €750 million from $1 billion equivalent.

The incremental proceeds from the notes and bank loan will be used to replace the contemplated $2 billion term loan A.

The notes are set to price Thursday.

Morgan Stanley & Co. LLC will bill and deliver for the notes, and is the left lead in a syndicate of banks that includes joint bookrunners J.P. Morgan Securities LLC, BofA Securities Inc., BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC and HSBC Securities (USA) Inc.

Mizuho Securities USA Inc., Wells Fargo Securities LLC, Barclays, RBC Capital Markets LLC, Santander Investment Securities Inc. and SG Americas Securities LLC are co-managers for the notes offer.

Upon release from escrow the proceeds plus cash on the balance sheet will be used to fund a dividend to Merck & Co., Inc., related to Organon's spinoff from Merck.

The issuing entity for the notes will be Organon Finance 1 LLC, to be assumed by Organon & Co.

The Kenilworth, N.J.-based company was created by Merck's spinoff of its women’s health, trusted legacy brands and biosimilars businesses.

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