(Reuters) – Drug capsule maker Capsugel is refinancing $1 billion of leveraged loans in a deal that also finances a $400 million dividend payment to its private equity owner KKR, banking sources said on Tuesday.
KKR bought Capsugel from Pfizer in 2011 for $2.38 billion, backed by around $1 billion of leveraged loans, according to Thomson Reuters LPC data.
UBS, Citigroup, KKR Capital Markets, Barclays, Deutsche Bank and Mizuho are leading the loan financing, which was shown to institutional investors at a bank meeting on Tuesday. Lenders have been asked to make commitments by July 28.
The financing includes a 355 million euro term loan, which pays 300 basis points over Euribor with a 1 percent Euribor floor, which guarantees a minimum return to investors.
The loans are offered with a 99.75 original issue discount. A $175 million revolving credit is also included, bankers said.
Capsugel is also raising a $415 million Payment-In-Kind (PIK) toggle note at the holding company level, which will mostly be used to finance the dividend payment, the bankers said.
KKR declined to comment.
Capsugel makes capsules that are used in a variety of medicines.Get your FREE trial or subscribe now to Buyouts to find new deal opportunities, super-charge your fundraising efforts and track top managers.