AP News

Watson Pharma selling $3.75B in senior notes

PARSIPPANY, N.J. (AP) — Watson Pharmaceuticals Inc. said Thursday it is selling $3.75 billion in company debt to help fund its purchase of European competitor Actavis Group.

Watson said it will sell unsecured senior notes that are due in five, 10, and 30 years. The company said it will redeem all the senior notes if the deal is canceled or if it is not completed by Feb. 28.

Watson said in April it would buy Actavis for $5.6 billion in a deal that will make Watson the third-largest generic drug company in the world and expand its business in Russia and Central and Eastern Europe. The companies expect the purchase to close during the fourth quarter.

Fitch Ratings lowered its rating on Watson's credit to 'BBB-' from 'BBB' Thursday, citing the company's increased debt. Fitch's rating remains investment grade, but it is now only one notch above "junk" status. The company said its outlook on Watson's rating is now stable.

Standard & Poor's kept a 'BBB' rating on Watson with a negative credit outlook.

In May, Watson increased the borrowing capacity under its revolving credit facility to $750 million from $500 million. In June the company said it is taking out a $1.8 billion five-year loan to help fund the purchase.

Shares of Watson Pharmaceuticals picked up 88 cents to $83.71 on Thursday.

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