Drug developer Mylan Inc. said Thursday it completed $500 million of interest rate swaps in a move meant to take advantage of a decline in medium-term interest rates.
The move is partly a response to what the company calls "abnormal trading activity" in its stock. Shares have dipped 25 percent from a closing price of $10.27 on Friday. The stock finished at $7.73 Wednesday.
The swap fixes the interest rate portion of Mylan's term loan and reduces the amount of its short-term LIBOR rate borrowings to about $850 million, the company said.
"We believe we have put in place a capital structure that is ideal for this difficult credit environment," said Mylan Vice Chairman and Chief Executive Robert J. Coury in a statement.
The interest-rate swaps lock in a fixed rate for a significant portion of Mylan's borrowings under its term loan, the company said. It currently has $4.1 billion outstanding under that facility, which the company used to finance the buyout of Merck KGaA's generics business. Of that amount, $1.25 billion is denominated in Euros, $2 billion has been converted to a fixed rate, and $850 million is subject to short-term fluctuations of LIBOR interest rates.
Mylan said it faces no major maturities on term loans for at least six years, or until 2014, and on its other borrowings until 2012.
Mylan shares advanced 52 cents, or 6.7 percent, to $8.25 in premarket activity.
The move is partly a response to what the company calls "abnormal trading activity" in its stock. Shares have dipped 25 percent from a closing price of $10.27 on Friday. The stock finished at $7.73 Wednesday.
The swap fixes the interest rate portion of Mylan's term loan and reduces the amount of its short-term LIBOR rate borrowings to about $850 million, the company said.
"We believe we have put in place a capital structure that is ideal for this difficult credit environment," said Mylan Vice Chairman and Chief Executive Robert J. Coury in a statement.
The interest-rate swaps lock in a fixed rate for a significant portion of Mylan's borrowings under its term loan, the company said. It currently has $4.1 billion outstanding under that facility, which the company used to finance the buyout of Merck KGaA's generics business. Of that amount, $1.25 billion is denominated in Euros, $2 billion has been converted to a fixed rate, and $850 million is subject to short-term fluctuations of LIBOR interest rates.
Mylan said it faces no major maturities on term loans for at least six years, or until 2014, and on its other borrowings until 2012.
Mylan shares advanced 52 cents, or 6.7 percent, to $8.25 in premarket activity.
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