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UPDATE 1-Mylan defends capital structure amid stock swoon
(New throughout; adds NEW YORK to dateline)
NEW YORK Oct 9 (Reuters) - Generic drug maker Mylan Inc MYL.N defended its capital structure on Thursday and said it "could hardly be in a stronger position" to weather the credit crisis, despite a 32 percent drop in its stock this month.
In a response to what the company described as "abnormal trading activity" in its shares, Mylan Chief Financial Officer Edward Borkowski said he believes the decline in Mylan's share price was unrelated to the company's business operations or fundamentals.
"Rather, we believe the decline has been driven by the need for certain institutions to meet capital requirements and by unwarranted concern regarding our capital structure," Borkowski said in a statement.
Mylan shares rose 6.7 percent in premarket trade.
The shares closed on Wednesday at $7.73 on the New York Stock Exchange, down from $11.42 at the start of the month. The Standard & Poor's 500 index .SPX has fallen 15.6 percent in that time.
Mylan has $4.1 billion outstanding under a term loan facility, which the company used to finance the acquisition of Merck KGaA's (MRCG.DE) generics business, the company said.
The company faces no major maturities on its term loans for at least six years, or until 2014, and on its other borrowings until 2012, Mylan said.
"We believe we have put in place a capital structure that is ideal for this difficult credit environment," Mylan Chief Executive Officer Robert Coury said.
None of Mylan's borrowings permit lenders to require early payment, the company said.
Mylan also said it completed $500 million of interest-rate swaps to fix the interest rate of a portion of its term loan borrowings to take advantage of the recent fall in medium-term dollar interest rates. The swaps fix the interest cost on this debt through 2010 at a rate of 6.03 percent. (Reporting by Lewis Krauskopf, editing by Gerald E. McCormick)
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