Aug. 24 (Bloomberg) -- Warner Chilcott Ltd., an Irish maker of birth-control pills and acne medicine, said it will use bank debt to help finance its $3.1 billion acquisition of Procter & Gamble Co.’s prescription-drug unit.

JPMorgan Chase & Co., Bank of America Corp., Credit Suisse Group AG, Morgan Stanley, Barclays Capital and Citigroup Inc. will provide Warner Chilcott with a senior secured bank facility and a senior unsecured bridge loan, company executives said on a conference call today.

“The important factoid here, I believe, is we were able to finance this 100 percent on a debt basis,” Chief Financial Officer Paul Herendeen said on the call.

The loan financing comes after $61.2 billion of leveraged loans were underwritten this year, down from $675.7 billion in the comparable period in 2007, the biggest year for the lending since at least 1999, according to data compiled by Bloomberg. Leveraged loans, such as the ones that will be used to back Ardee, Ireland-based Warner Chilcott’s acquisition, are those rated below Baa3 at Moody’s Investors Service and BBB- by Standard & Poor’s.

“The fact that the company was able to go out and secure financing commitments from a group of six high-quality financial institutions on what we believe are good terms to enable us to do this deal is quite an accomplishment,” Herendeen said.

Debt Structure

The six banks have committed to provide $2.75 billion of debt, split between a $2.5 billion term loan and a $250 million revolving line of credit, according to a regulatory filing today. In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t.

The banks have also committed to provide up to $1.4 billion of an unsecured bridge facility, according to the filing.

Warner Chilcott has $380 million face amount of existing subordinated notes that will remain outstanding. It will retire its existing term loans, Herendeen said on the call.

The company has a history of pre-paying its debt, he said. It prepaid $103 million of current obligations in the first half of this year, Herendeen said.

“In the absence of compelling opportunities to invest in our business post-close, we would expect to use our free cash flow to pre-pay debt beginning with the first quarter post- closing,” he said.

To contact the reporter on this story: Kristen Haunss in New York at khaunss@bloomberg.net

Last Updated: August 24, 2009 18:03 EDT