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Aug 25, 2008
 |  BioCentury  |  Finance

$2.5B of leverage magic

If the acquisition of Talecris Biotherapeutics Inc. by CSL Ltd. goes through, investors Cerberus Capital Management and Ampersand Ventures will make more than $2.5 billion from an investment in the plasma-derived therapeutics company by loading it up with debt and then selling it for a profit.

Talecris Holdings, comprised of Cerberus and Ampersand, set up Talecris Biotherapeutics to acquire the plasma products business of Bayer AG for $324.8 million, including transaction costs, in 2005. With net of $20.9 million in acquired liabilities, Talecris actually paid $303.5 million in cash and 1 million in common stock that it later reacquired as well as one share of 14% junior preferred stock.

According to SEC filings made when the company filed for an IPO last year, Cerberus and Ampersand contributed $125 million to fund the original deal, while Talecris borrowed another $200 million under a $440 million credit facility from JPMorgan Chase.

The $125 million from Cerberus and Ampersand took the form of a $25 million loan to Talecris at 12% and $90 million in 14% convertible notes, the latter of which was eventually converted to shares. The remaining $10...

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