Wachovia Securities has launched syndication of a credit facility for Colgate Medical to back its parent company Orthofix's $150 million acquisition of BREG, a manufacturer of rehabilitative and pain management products. The facility comprises a five-year, $110 million term loan and a five-year, $15 million revolver. BREG had been a distributor of one of Orthofix's products for a couple of years and the company developed a relationship, according to Thomas Hein, Orthofix's cfo. "[BREG is] an excellent strategic fit for us," Hein said. "It expands our distribution channels to markets we don't call on in the orthopedic space."
This transaction is the first time Orthofix is doing business with Wachovia. The bank participated in introducing the company to the transaction and had been following the deal, Hein said. "They were a logical one to pursue," Hein said of Wachovia. Pricing on the facility will be determined during the syndication process. After the transaction, Colgate Medical's total debt will be 2.5 times EBITDA for 2003 and leverage at Orthofix will be 1.8 times. The purchase price of $150 million represents approximately nine times BREG's EBITDA. The acquisition will also be financed by cash on hand and Orthofix common stock valued at $27.8 million. Bankers at Wachovia did not return calls.