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Amneal Pharmaceuticals’ proposed $2.544 billion term loan extension hinges on a novel approach giving extending lenders an enhanced collateral position that would allow certain CLOs that are beyond their reinvestment periods the ability to extend, sources said.

According to the plan laid out for lenders during a call earlier this week, once the J.P. Morgan-agented effort hits a threshold of 51% of the deal extended, the existing loan would be amended, releasing guarantees and collateral that constitute less than substantially all of its value, as the credit facility permits. Also eliminated would be related representations and warranties, covenants, mandatory prepayments and certain events of default, sources said.

Meanwhile, the extended loan would retain collateral substantially similar to the existing deal prior to the amendment and that collateral would be enhanced with the pledge of Amneal’s 65% equity interest in AvKARE, though that business would not be an obligor and maintains its own standalone debt structure of a $30 million RC, $38 million term loan and a $44 million unsecured seller note, according to S&P.

In addition, the issuer would use commercially reasonable efforts to obtain a pledge of Amneal’s equity investment in Amneal Complex Products Research. Also added to the pool will be certain real property mortgages with a fair market value greater than $5 million.

The move, while not explicitly an uptier exchange, would nevertheless place non-extending holders at a disadvantage, and as such would open the door for CLOs that are past reinvestment to extend on the basis that approving the transaction enhances their credit position and improves their potential for recovery, sources said. The transaction was previewed to big holders last week, and the issuer is targeting the elimination of any un-extended stub, sources said.

As reported, Amneal is seeking to extend the maturity of its existing term loan B (S+ARRC CSA+350, 0.5% floor) from May 2025 to May 2028. Under the proposal, pricing would increase to S+525 with a 0.5% floor with the extended loan offered at a 96 OID. Lenders are offered 12 months of 102 hard call protection, followed by 12 months of 101 soft call protection.

J.P. Morgan is targeting a Wednesday, Nov. 1, deadline for commitments.

The issuer earlier this week previewed forthcoming results for the quarter ended Sept. 30. On an unaudited basis, the issuer is projecting net revenue of $610 million to $620 million, an increase of approximately 13% from the third quarter of 2022, while adjusted EBITDA is in a range of $150 million to $155 million, up 21% over the year earlier period. As such, net leverage would fall to 4.6x at Sept. 30, from 5.3x at year-end due to debt reduction and increased profitability.

Alongside the preview, Amneal increased full-year guidance with net revenue now expected at $2.37 billion to $2.42 billion, versus the prior view of $2.3 billion to $2.4 billion, while adjusted EBITDA guidance increased to $540 million to $550 million from a range of $525 million to $540 million.

Amneal is listed on the NYSE under the symbol AMRX and has a market capitalization of $1.03 billion. The issuer and its term loan B are rated B2/B with a 4 recovery rating from S&P on the loan.


Chris Donnelly



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