Ortho-Clinical Diagnostics Inc., the Johnson & Johnson (JNJ) unit being purchased by Carlyle Group LP, set the rate on a $2.18 billion loan backing the deal, according to a person with knowledge of the transaction.
The seven-year covenant-light term loan will pay interest at 3.5 percentage points more than the London interbank offered rate, with a 1 percent minimum on the lending benchmark, according to the person, who asked not to be identified without authorization to speak publicly. The secured facility also includes a $350 million, five-year revolving credit line.
J&J last month accepted the private-equity firm’s $4 billion offer to buy its laboratory-instruments and diagnostic-products company. Financing also includes $1.15 billion in bridge senior unsecured notes, according to a Standard & Poor’s report last week. The company is rated B by S&P to reflect its “highly leveraged” financial profile, and an equivalent B2 by Moody’s Investors Service.
The rate being offered by the Raritan, New Jersey-based company compares with an average yield of 5 percent on first-lien loans from medical-equipment providers that come due in three to 10 years, according to data compiled by Bloomberg.
Barclays Plc is arranging the deal, along with Goldman Sachs Group Inc., Credit Suisse Group AG, UBS AG and Nomura Holdings Inc.
In a revolving line of credit, money may be borrowed again once it’s repaid; in a term loan it can’t. Libor, the rate banks charge to lend to each other, was set at 22.5 basis points today. A basis point is 0.01 percentage point.