Warner Chilcott Sets Rate on $600 Million Dividend Loan

Warner Chilcott Plc (WCRX), a drugmaker specializing in woman’s health and dermatology, set the interest rate it will pay of $600 million on loans the company is seeking to fund a shareholder dividend, according to a person with knowledge of the transaction.

The five-year $300 million B-4/5 portion will pay interest at 3 percentage points to 3.25 percentage points more than the London interbank offered rate, said the person, who asked not to be identified because the terms are private.

Warner Chilcott is proposing to sell the loan at 99 to 99.5 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.

A $300 million B-6 piece due in March 2018 will pay interest at 3.25 percentage points more than Libor with a 1 percent floor, according to the person. The debt is expected to be sold to investors at 99 cents, the person said.

Lenders on both term loans will be offered one-year soft call protection of 101 cents, the person said, meaning the company would have to pay 1 cent more than face value to refinance the debt during its first year.

The debt is rated Ba3 by Moody’s Investors Service and BBB- by Standard & Poor’s.

Bank of America Corp. and Goldman Sachs Group Inc. are arranging the debt for the Dublin-based company and investors must let the banks know by Aug. 14 at 5 p.m. in New York whether they will participate in the transaction, the person said. The deal is expected to close and fund the week of Aug. 20.

A group including Thomas H. Lee Partners LP, Bain Capital LLC, and the buyout units of JPMorgan Chase & Co. and Credit Suisse Group AG took the drugmaker private in 2005 for about 1.6 billion pounds ($2.1 billion) and brought it public again in 2006. Credit Suisse sold its stake in 2010.

Emily Hill, of Warner Chilcott’s investor relations department, didn’t immediately respond to an e-mail seeking comment.

To contact the reporter on this story: Michael Amato in New York at mamato3@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

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