LONDON, May 21 (Reuters) - Specialty drugmaker Endo International has agreed a $9.275 billion loan package backing its $8.05 billion acquisition of privately-owned Par Pharmaceuticals, the borrower announced in an SEC filing on Thursday.
The financing has been initially committed by Deutsche Bank and Barclays.
The deal comprises a $1.5 billion, three-year senior secured term loan B1 facility; a $3.5 billion, seven-year senior secured term loan B2 facility; and a $1 billion, five-year senior secured revolving credit facility.
There is also a $2.275 billion, one-year unsecured senior bridge loan and a $1 billion, one-year senior secured asset sale bridge facility.
The term loan B1 pays 275bp over Libor, the term loan B2 pays 325bp, while the revolver pays 250bp ranging between 175bp and 275bp depending on a secured leverage ratio grid.
The revolver also pays a commitment fee on undrawn funds ranging between 30bp and 50bp.
The undrawn amount of the revolver cannot be less than $400 million, less any amounts needed to fund flex OID or upfront fees.
The bridge loan pays an initial margin of 525bp over adjusted Libor - the greater of 100bp or three-month Libor - increasing 50bp every three months after closing.
The asset sale bridge pays 275bp over adjusted Libor - the greater of 75bp or three-month Libor - increasing 50bp every three months after closing.
Endo has agreed to acquire Par from private investment firm TPG, including the assumption of around $2.4 billion of Par’s existing third party debt.
The financing structure is expected to comprise around 18 million Endo shares, equating to $1.55 billion, and $6.5 billion of cash. Endo said that it expects to rapidly delever back to 3.0 to 4.0 times net debt to Ebitda in 12 to 18 months after the close of the acquisition.
The cash consideration will eventually be funded through a combination of cash; debt, including term loans and bonds; and an equity offering.
The acquisition, which is expected to close in the second half of 2015, carries a transaction multiple of 10 to 11 times adjusted pro forma Ebitda on a post-synergy basis.
Total financing costs on the transaction are expected to be between 5.25 percent and 5.5 percent. (Editing by Christopher Mangham)