Pharmaceutical company Quintiles Transnational Corp. has entered into a new $1.47 billion credit facility to pay off all its existing bond debt and $475 million of preferred stock. John Ratliff, cfo, said the bank deal comes on more favorable terms than it could find in the bond market. "We like the flexibility of senior debt. It doesn't have the same restrictions as bonds," he said. The deal launched last Wednesday.
The deal consists of a $250 million first-lien revolver; a $900 million first-lien term loan "B" and a $320 million second-lien term loan "C." The bank facility will be used to retire $600 million of 10% senior subordinated notes due 2013, 11.5% senior discount notes due 2014 and $475 million of preferred stock priced at 12%. Pricing on the bank facility was not disclosed, but Ratliff said it is much cheaper than its bond debt and equity. "We are getting dramatically better cost with the senior debt," he said
Citigroup is leading the financing, while JPMorgan and Morgan Stanley are joint bookrunners. Ratliff said the company chose the banks because of long-standing relationships. Citigroup led Quintiles' $835 million financing to back its $1.7 billion leveraged buyout by Pharma Services Acquisition Corp. in 2003. Quintiles paid off the senior debt from the LBO in the fourth quarter of 2005. The company approached Citigroup to do the deal after seeing how low interest rates were. Ratliff said Citigroup was quick to respond to the company's desire to go ahead with the financing.