Valeant Pharmaceuticals International Inc. (VRX:US), Canada’s largest publicly traded drugmaker, obtained a $2.75 billion bridge loan to support its acquisition of Medicis Pharmaceutical Corp. (MRX:US)
JPMorgan Chase & Co. is providing the financing, the company said in a filing today with the Securities and Exchange Commission. Bridge financings usually mature in one year and are often used as backstops to bond offerings or longer-dated bank debt.
“We will finance the transaction with the combination of term loan and bonds,” Chief Executive Officer J. Michael Pearson said on a conference call.
The transaction will push the company’s leverage, or debt to earnings before interest, taxes, depreciation and amortization, to 4.2 times, Pearson said.
Moody’s Investors Service today placed Valeant on review for downgrade because the acquisition may “push Valeant’s leverage beyond Moody’s tolerance level for the Ba3 rating”, credit analyst Michael Levesque wrote in a research report.
Valeant is acquiring Medicis for $44 per share, representing a 39 percent premium to Medicis’s trading price at market close on Aug. 31.
Bridge facilities are short-term loans that usually mature in one year and are often used as backstops to bond offerings or longer-dated bank debt.
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