Schweitzer-Mauduit inks $1.046B backstop facility for Scapa Group buy

Schweitzer-Mauduit International Inc. disclosed today that the company has entered into a backstop credit agreement with J.P. Morgan in connection with the company's planned $552 million acquisition of U.K.-based Scapa Group, which is expected to close in the second quarter of calendar 2021.

The backstop credit agreement provides for a roughly $1.046 billion term loan and revolving credit facility. The company intends to replace the backstop credit agreement by seeking to obtain the consent of its lenders to amend and restate the existing syndicated term loan and revolver under the company’s existing pro rata credit facility to add a new term loan B facility.

The backstop credit agreement outlines a $350 million term loan B commitment, a $195.5 million term loan A commitment, and a $500 million revolver commitment. Pricing on the TLA and revolver is outlined as tied to net leverage-based grid at L+125-225, while pricing on the TLB is outlined at L+400.

The backstop credit agreement outlines that financial covenants, which will apply solely to the term loan A facility and revolver, will include a maximum net leverage ratio initially set at 5.5x, with steps to 4.5x, and an interest coverage ratio set at 3x.

As of Sept. 30, 2020, the company had $196 million outstanding under its term loan A due September 2025 and $90 million outstanding under a $500 million revolver.

Schweitzer-Mauduit International, together with its subsidiaries, provides engineered solutions and advanced materials for various industries worldwide. Corporate issuer ratings are BB–/Ba3.