Lawson Products eyes up to $450M facility for merger with TestEquity, Gexpro

Lawson Products Inc. disclosed Jan. 13 it entered into a debt financing commitment letter with J.P. Morgan providing a senior secured credit facility of up to $450 million in connection with the company's planned combination with TestEquity and Gexpro Services, two portfolio companies of LKCM Headwater Investments, the private investment arm of Luther King Capital Management.

The commitment letter outlines a five-year facility that includes a $250 million term loan and a $200 million revolver. J.P. Morgan agreed to provide up to $125 million of the facilities.

Pricing is outlined as tied to a leverage-based grid and benchmarked to the secured overnight financing rate, with pricing at Sofr+100-275, with pricing adjustments equal to 10 basis points for one-, three- and six-month tenors. The pricing also includes a 1% floor.

The facility is outlined to include a maximum total net leverage covenant and a minimum interest coverage ratio covenant.

Proceeds are earmarked to back the merger as well as refinance Lawson's existing credit facility and certain existing debt at TestEquity and Gexpro Services.

Pro forma debt to adjusted EBITDA is expected to be approximately 3x at closing.

Lawson Products distributes products and services to the industrial, commercial, institutional, and government maintenance, repair and operations marketplace.