Investors question if lead arrangers Bear Stearns and Lehman Brothers will pull off the $225 million deal they launched two weeks ago for the buyout of pharmaceutical unit MedPointe, Inc. by Carlyle Group and Cypress Group. One buysider said roughly $100 million in commitments has come into the $150 million "B" tranche of the deal, but, she said, "it will be a stretch," for the banks to fund the remainder. Officials at Bear Stearns and Lehman Brothers did not return calls. Calls to Carlyle and Cypress were not returned by press time.
Another buysider noted that investors are looking cautiously at the credit because the new pharmaceutical entity--a divestiture of Carter Wallace is difficult to assess in terms of expense structure and EBITDA. "Who knows what their expense structure will look like moving forward," he said. In addition, the drug producer reportedly has only four products in the market, with the market defining three of them as "mature". "All of their eggs are in one basket," he said, noting that the company is relying on a new allergy medication to generate future revenue streams.
The credit, fully secured by the company's assets, is split into a $35 million revolver, a $40 million term loan "A", and a $150 million "B" term loan. Pricing is at LIBOR plus 31/ 4% on the pro rata and at LIBOR plus 33/ 4% on the institutional piece.