KKR taking $400 mln dividend on Capsugel

  • Capsugel is refinancing $1 billion of leveraged loans
  • Holding company PIK toggle will finance dividend
  • KKR bought capsule maker from Pfizer in 2011

KKR bought Capsugel from Pfizer in 2011 for $2.38 billion, backed by around $1 billion of leveraged loans, according to data from sister service Thomson Reuters Loan Pricing Corp. 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 July 15. Lenders have been asked to make commitments by July 28.

The financing includes a 355 million euro ($482 million) 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.

Claire Ruckin is a correspondent for Thomson Reuters LPC in London.