Medical device manufacturer Medex completed a $170 million credit for the buyout of the intravenous catheter business of Ethicon Endo-Surgery, a Johnson & Johnson subsidiary, after decreasing the size of the bank deal and increasing the size of a concurrent bond deal. The bond deal was increased from $150 million to $200 million, said Mike Dobrovic, cfo, explaining that the shift was made to take advantage of a hot bond market and also to reduce the company's senior debt. One Equity Partners--the private equity arm of Bank One--invested in Medex to become the majority shareholder of the Dublin, Ohio-based company and to enable Medex to complete the acquisition. Dobrovic would not state the purchase price or terms related to the acquisition.
The originally proposed five-year, $25 million revolver increased to $40 million to bring more relationship banks into the deal, Dobrovic noted. But the six-year, $175 million "B" loan decreased to $130 million. Wachovia Securities and Lehman Brothers led both the bank and bond deals. Dobrovic said One Equity brought the two leads in to head up the transactions because of the private equity sponsor's experience with the two lenders. He added that Wachovia took the reigns for the credit, while Lehman primarily handled the bond offering. Huntington Bank and LaSalle Bank led the previous $39 million credit for Medex and Dobrovic said the two lenders joined the new deal as well. Bank One and Fifth Third Bank also rounded out the company's list of six relationship lenders, he added.
The "B" loan was about three times oversubscribed with 41 lenders joining the tranche, Dobrovic stated. The "B" loan has a spread of 33/4% over LIBOR. "Pricing was better than we had anticipated," he said. The company's leverage is over four times and its total debt is $330 million. Nothing has been drawn on the revolver, Dobrovic noted. The credit is secured by all of Medex's U.S. assets and 65% of stock in its foreign subsidiaries.