Salix plans $1.35 billion credit facility, $750 million notes

By Sara Rosenberg

New York, Nov. 18 - Salix Pharmaceuticals Ltd. revealed in an SC 13D filed with the Securities and Exchange Commission on Monday that it plans on getting a $1.35 billion senior secured credit facility and selling $750 million of senior notes to help fund its acquisition of Santarus Inc.

The credit facility consists of a $150 million five-year revolver and a $1.2 billion six-year covenant-light term loan.

Pricing on the revolver is expected at Libor plus 300 basis points with a 50 bps unused fee and a 1% Libor floor, and pricing on the term loan is expected at Libor plus 375 bps with a 1% Libor floor.

The term loan has 101 soft call protection for six months and amortization of 1% per annum.

Backing the bonds is a commitment for a $750 million one-year bridge loan that is priced at Libor plus 525 bps with a 1% Libor floor. The spread will increased by 50 bps every 90 days until it reaches a cap.

Jefferies Finance LLC is leading the financing.

Other funds for the transaction will come from about $800 million of cash on hand.

Under the agreement, Santarus is being bought for $32 per share, or about $2.6 billion.

Closing is expected in the first quarter of 2014, subject to a minimum tender of at least a majority of the outstanding shares of Santarus common stock on a fully diluted basis, the expiration or termination of the waiting period under the Hart Scott Rodino Antitrust Improvements Act and other customary conditions.

Annualized combined company financial results based on the quarter ended Sept. 30 were revenue of around $1.35 billion and adjusted EBITDA of $537 million.

The company expects that strong cash flow generation should allow delevering to a debt/EBITDA target of about 3 times over the next three years.

Salix is a Raleigh, N.C.-based developer and marketer of prescription pharmaceutical products and medical devices for the prevention and treatment of gastrointestinal diseases. Santarus is a San Diego-based specialty biopharmaceutical company.

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