RLPC: Pfizer markets $1B RC to back spinoff

NEW YORK Fri Dec 7, 2012 10:40am EST

NEW YORK Dec 7 (Reuters) - Pfizer Inc is in market with a $1 billion, five-year revolver that will back the company's spinoff of its animal health division, sources told Thomson Reuters LPC.

JP Morgan is lead left. Bank of America Merrill Lynch, Barclays and Morgan Stanley are to the right of JP Morgan.

Pfizer declined to comment. JP Morgan and Barclays declined to comment. BAML and Morgan Stanley did not return calls by press time.

Pricing will be based on corporate ratings of the spun-off entity, to be called Zoetis. Ratings are expected to fall in the Baa2/BBB to Baa3/BBB- range, according to sources. If Zoetis obtains ratings of Baa2/BBB it will pay 15bp if the facility remains undrawn. The company will pay LIB+125 if it draws down amounts under the revolver.

However, if the new company obtains ratings of Baa3/BBB- it will pay 20bp if the facility remains undrawn. The company will pay LIB+150 on amounts drawn under the revolver.

If the company's ratings were to change beyond those categories the company would pay a range between 12.5bp to 32.5bp if the facility remains undrawn and a drawn spread that would range from LIB+112.5 to LIB+225.

Pfizer filed a registration in August for the initial public offering of a minority stake in the new animal health company. The giant drug concern announced its spinoff plans in June.

The JP Morgan, Bank of America Merrill Lynch and Morgan Stanley IPO is expected to take place next year. The spinoff is part of an ongoing makeover by Pfizer to divest non-pharmaceutical businesses and boost shareholder returns.

The company agreed in April to sell its baby formula business to Nestle SA for $11.85 billion. In the third quarter of 2011, Pfizer sold its capsule-making business Capsugel to Kohlberg Kravis Roberts for $2.38 billion in cash. - MS

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