Warner Chilcott plc (WCRX) reported that as a result of its previously announced process to explore strategic alternatives, its board of directors has approved a series of transactions intended to enhance shareholder value. More specifically, WCRX’s board of directors has approved a recapitalization transaction, a new dividend policy for regular cash dividends and the renewal of the Company’s existing share redemption program.
Pursuant to the recapitalization, the Company intends to incur, subject to market and other conditions, $600 million of new debt that will be used, together with available cash, to fund a special dividend to Warner Chilcott’s ordinary shareholders of $4.00 per share, or approximately $1.0 billion in the aggregate. WCRX is trading at $17.56 for a special dividend yield of 23%. WCRX has an equity summary score of 9.8 out of 10 for a VERY Bullish outlook.
The new debt is expected to be comprised of new senior secured term loans under the Company’s existing senior secured credit facilities. The declaration of the special cash dividend is conditioned on the amendment of the Company’s existing senior secured credit facilities to permit, among other things, the incurrence of the additional indebtedness needed to fund the special cash dividend. Warner Chilcott intends to declare the special cash dividend upon the successful amendment of the existing credit facilities. The Company currently expects to declare and pay the special cash dividend before the end of the third quarter of 2012.
Warner Chilcott also announced today a new dividend policy under which it expects to pay a total annual cash dividend to its ordinary shareholders of $0.50 per share in equal semi-annual installments of $0.25 per share. Any declaration by the board of directors to pay such future cash dividends, however, will depend on Warner Chilcott’s earnings and financial condition and other relevant factors at such time. The first semi-annual dividend is expected to be paid, subject to declaration by the board of directors, in the fourth quarter of 2012.
Warner Chilcott plc, a specialty pharmaceutical company, focuses on the development, manufacture, and promotion of branded pharmaceutical products in women’s healthcare, gastroenterology, dermatology, and urology segments in North America and western Europe markets.