Toronto-based Biovail Corp., a specialty pharmaceutical company, has reduced its revolver by $150 million to $250 million as it seeks to reduce fees on its credit line. Last year Biovail paid down the balance on its previous revolver and has also changed the way it sells its products in the U.S. Biovail is now focused on direct selling to specialist physicians, cutting infrastructure requirements and reducing capital requirements.
According to Ken Howling, v.p. of finance and corporate affairs, Biovail had $280 million drawn on its credit facility at the start of 2004 and $100 million in cash. Since then the firm has paid down the facility completely and has increased its cash position to over $230 million. The firm wanted to reduce the fees associated with the line and did not require the larger facility, he explained.
The credit is unusual in being only a one-year credit line, though there is a one-year term-out option on the line. "We believe it is financially prudent to have short-term and long-term debt," he stated. The company has $400 million of outstanding 7 7/8% senior subordinated notes that are due in 2010. Howling said buying the bonds in the open market or taking them out is an option, but right now Biovail is focused on investing in its growth initiatives. The call dates and premiums on the bonds are 103.938 if the company acts in April 2006 and 101.969 for April 2007. After April 2008 it is par.
Scotia Bank leads the bank deal and Bank of Montreal is the syndication agent in the renewed revolver as well as the previous deal. The bank group remained unchanged and also comprises Royal Bank of Canada and HSBC. Lead arrangers in the U.S. include Credit Suisse First Boston, UBS and JPMorgan. "We have an excellent relationship with Scotia Bank, our lead bank, and are very pleased to have the support of our full lending syndicate," Howling concluded. Pricing on the line remained unchanged.
The corporate credit ratings from Standard & Poor's and Moody's Investors Service are BB+ and B1, respectively, and the current ratings on its notes from S&P and Moody's are BB- and B2, respectively.