UBS Warburg has set pricing on the $635 million bank deal for Zurich-based Centerpulse, formerly Sulzer Medica. The $335 million "B" piece is priced at LIBOR plus 3 1/2% with a commitment fee of 25 basis points, while the $300 million "A" term loan holds a spread of 2 3/4% over LIBOR, one banker said, noting that both tranches are split equally between U.S. dollar and Euro-denominated portions. The meetings in New York and Zurich were well attended, the banker noted, although commitment levels so far could not be ascertained.
The bank deal will fund the settlement of a U.S. class action suit brought by individuals affected by defective hip and knee implants (LMW, 9/23). Ratings had not been officially announced as Loan Market Week went to press, but one banker said mid- to high four-B ratings are expected. "The transaction is fairly straightforward, even if the proceeds are different," he explained, drawing a parallel with the U.S. tobacco settlements. A UBS banker declined to comment.
Erwin Schaerer, a spokesman for Centerpulse, said the bank debt and a capital increase were believed to be the best solution for the settlement. A tradable preemptive rights offering of $165 million will be conducted with pricing to be set on Monday. "Shareholders, with the exemption of certain countries including the U.S., are entitled to buy new shares," he added. Funding of the credit is contingent on the completion of the share offering.