Sun Pharma Considers Debt Swap, Bonds for Mega USD 12 Billion Organon Acquisition: Report

The Indian drugmaker is considering seeking consent from Organon bondholders to swap their holdings into Sun Pharma debt, the people said, asking not to be identified discussing private matters. It is also working on a potential euro-denominated bond that could carry a credit rating one to two notches higher than the one assigned to Organon before the proposed merger, they added.

Separately, the company is planning to raise as much as $3 billion to $4 billion in offshore loans, the people said, adding that the deal is expected to get necessary approvals by December. The final funding could be a combination of all options, they said.

The discussions highlight the scale of the deal, which would rank among the largest outbound acquisitions by an Indian drugmaker and aims to secure funding while preserving Sun Pharma’s credit profile. The latest funding proposal may replace an earlier bridge loan facility that Sun Pharma was seeking, the people said.

At least three banks — Mitsubishi UFJ Financial Group Inc., JPMorgan Chase & Co. and Citigroup Inc. — had committed to provide initial funding through a bridge facility, the people said.

“Currently, three banks including Citi have underwritten the acquisition facility and will work with Sun extensively over next few months on multiple aspects and milestones of the acquisition including finalizing the long-term capital structure,” K Balasubramanian, CEO of Citi India and banking head of Indian subcontinent, said.

Sun Pharma, JPMorgan and MUFG did not immediately reply to Bloomberg’s e-mailed queries seeking comments.

In a presentation last month, Sun Pharma said it would use $2 billion to $2.5 billion from its cash reserves to help fund the acquisition.

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