aaiPharma, a science-based pharmaceutical company, is tapping the bank debt market for a credit to back the acquisition of a portfolio of pain management products from Elan Corp. for $100 million. Bank of America, Wachovia Securities and CIBC World Markets launched syndication of the deal at a bank meeting last Thursday, said a banker. The purchase requires aaiPharma to pay $51.6 million in cash and take on $51.4 million of Elan's debt. Last year, aaiPharma bought the pain drug Darvocet from Eli Lilly for $211.4 million using bank debt.
The total bank deal being syndicated is $260 million, said a banker. This is split between a $100 million, five-year revolver that is priced at LIBOR plus 31/2%, and a six-year, $160 million "B" loan. Pricing on the institutional tranche is LIBOR plus 33/4%. The credit is rated BB-/B2 by the agencies. A spokeswoman for the company explained aaiPharma is refinancing the existing debt and increasing the bank lines for the product acquisition. She said the pharma company is comfortable using debt as this form of financing does not dilute shareholder value. aaiPharma has demonstrated it can pay down the debt with $80 million of the Darvocet financing paid down since the acquisition.