Without major previous exposure to the debt markets, Quintiles Transnational Corp. completed a $835 million financing package to back its $1.7 billion buyout by Pharma Services Acquisition Corp. "The only other time the company did anything in the market at all of this nature was with a convertible offering in 1997 and that was paid off in 2000," said James Bierman, cfo of the pharmaceutical services organization. Quintiles also previously had a $150 million revolver that the company let expire and did not renew. The new credit includes a $310 million, six-year "B" loan and a $75 million, five-year revolver. Financing to back the buyout also included a $450 million senior subordinated notes component, Bierman noted.
Citigroup leads both the credit and notes deals. Bierman said Citi was selected because of the bank's responsiveness, flexibility and creativity in response to the complex nature of a buyout transaction. "They demonstrated excellent responsiveness during the selection phase," he added. ABN Amro and Bank One are also co-managers on the notes, he said, adding that the two banks joined the credit as well. Other syndicate members include Scotia Capital, Foothill Capital Corp., Merrill Lynch and TD Securities.
The company did not disclose pricing on the new credit, but market sources quoted the "B" piece at LIBOR plus 41/4% and the revolver at LIBOR plus 31/4%. "We were pleased. . .The transaction we put forth isn't hugely interest-rate sensitive. . .We had a fair amount of flexibility and we are excited about the new investors that we have," Bierman noted.
Pharma Services was formed for the acquisition of Quintiles by Dennis Gillings, chairman and founder of the company, and One Equity Partners, the private equity arm of Bank One. Two more major partners--Singapore-based Temasek Holdings and Texas Pacific Group--also joined the private equity pool.