aaiPharma has completed a $160 million, six-year term loan "B" backing its acquisition of four products from Elan Corp. and is looking to increase its $85 million revolver to $100 million. The new term loan was highly oversubscribed and the company is going to work to increase the revolver over time, explained William Ginna, Jr., executive v.p. and cfo of aaiPharma. The company's revolver was amended and increased to $85 million when the term loan was completed.
The company decided to tap the loan market to quickly complete the financing for the acquisition of the Roxicodone, Oramorph SR, Roxanol and Duraclon products from Elan. In general, unless the equity markets are fantastic, the company will tap the bank loan market, explained Ginna. The credit allows the company some flexibility to pursue other acquisitions. Moreover, aaiPharma has a potential payment of approximately $30-32 million connected to its acquisition of the M.V.I. products from AstraZeneca in 2001, depending on certain product approvals. The company can use the funds under the new credit to meet that obligation, said Ginna.
The new term loan is priced at LIBOR plus 31/4%, which is a significant decrease from the company's former $100 million, five-year term loan that was priced at LIBOR plus 41/2%. The company's revolver is priced at LIBOR plus 31/4%, but aaiPharma believes that it will be able to reduce the interest to about 23/4% over LIBOR with the increased deal. The revolver is available through 2007. The company has also had a recent history of paying down its loans quickly and would like to continue that trend, said Ginna.
Bank of America, Wachovia Securities and CIBC World Markets lead the credit. The company had success with the bank group in the past and thought it would prudent in the interest of time to tap them again, said Ginna. He noted that B of A has been one of the company's long-time banks. B of A brought on CIBC, while Wachovia is very familiar locally, he added.