Valeant Pharma finalizes Bausch & Lomb acquisition loan

Thu Jun 27, 2013 2:16pm EDT

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(Reuters) - Valeant Pharmaceuticals (VRX.TO) has finalized tranche sizes on the new loan backing the company's $8.7 billion acquisition of Bausch & LombWPRISB.UL, sources told Thomson Reuters LPC.

Valeant's new term loan A, which is to be sold mainly to bank lenders, was increased to roughly $850 million from $500 million. The TLA is set to mature in April 2016.

The new term loan E, which is largely marketed to institutional investors, has been downsized to $3.2 billion, from $3.55 billion as initially proposed. The TLE matures in June 2020.

Pricing on the new TLA finalized at LIB+225 with a 98.5 issue price. The new TLE cleared markets at LIB+375, with a 75bp Libor floor, and a 98.5 issue price.

This week, Valeant increased the discount on the new TLA from an initially proposed 99-99.5. In addition, pricing on the TLB was increased from initial guidance of LIB+325-350, with a 75bp Libor floor, and a 99.5 original issue discount.

The increase in pricing during the syndication of Valeant's acquisition loans reflects how broad market volatility is making it more difficult to get deals done in the U.S. leveraged loan market.

Average yields widened to 5.02 percent by the end of last week, up from 4.93 percent the first week of June, according to Thomson Reuters LPC data. U.S. secondary loan prices are now sitting at 98.37, down from 99.07 at the end of May.

The new TLE began trading Thursday afternoon, last quoted at 99.75-100, sources said.

The new financing package also includes $3.225 billion of senior notes, and $1.75 billion of equity.

Goldman Sachs is lead-left arranger on the loans, joined by JP Morgan, Bank of America Merrill Lynch, Barclays, Morgan Stanley, and RBC. Goldman Sachs is lead-left bookrunner on the bonds as well.

MFN LANGUAGE

To comply with most favored nation (MFN) protection on Valeant's existing Series D and Series C term loans, the company has boosted pricing on those loans by 87.5bp. Pricing on the Series D and C term loans is now LIB+362, with a 75bp Libor floor.

The MFN protection in the Series D and Series C credit agreement prevents the company from issuing new term loans at a rate more than 50bp higher than the rates on the existing loans, unless rates on the existing loans are increased.

As of March 31, Valeant had a $1.93 billion, dollar-denominated term loan A due April 2016; a $1.27 billion, Series D term loan B due February 2019 at a spread of LIB+275 with a 75bp Libor floor; and a $973.8 million, Series C term loan B due December 2019, also at LIB+275 with a 75bp floor.

Valeant announced its acquisition of global eye health company Bausch & Lomb on May 27. Bausch & Lomb will retain its name and become a division of Valeant.

(Reporting By Natalie Wright, Caleb Frazier)

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