Hunter Douglas allocates cross-border loans backing buyout; terms

The cross-border term loan financing backing 3G’s buyout of Hunter Douglas NV has allocated in-line with final terms given yesterday to leave the deal split between a $3.5 billion tranche priced at 350 bps over the secured overnight financing rate, with a 0.5% floor, offered at 99.5, and a €1 billion portion priced at E+400, with a 0% floor, offered at 99.5.

On the break, the dollar tranche was quoted at 99.625/99.875, while the euro tranche was wrapped around par in a 99.75/100.25 market.

Final terms give a yield of 4.15% on both dollar and euro portions. That compares with talk given at launch of Sofr+350-375, with a 0.5% floor, and E+375-400, with a 0% floor, respectively, with both tranches offered at 99.5. The dollar tranche was upsized from an initial $3.1 billion, with euro tranche downsized from €1.35 billion.

In addition, there is now one pricing step-down of 25 bps at 0.75x inside closing first-lien net leverage on both tranches, revised from an initial pitch for two leverage-based step-downs and an additional step-down upon an IPO. The loans have a seven-year maturity and come with six months of 101 soft call protection.

Documentation changes were made pertaining to MFN and carve-outs, ratio debt baskets, the available amount and restricted payments, among other things.

J.P. Morgan and Morgan Stanley are joint lead arrangers on the deal, while the joint bookrunners are BofA Securities, Barclays, BNP Paribas, Credit Suisse, Goldman Sachs, ING, J.P. Morgan, Morgan Stanley, MUFG and Rabobank. J.P. Morgan is administrative agent on both tranches.

Corporate and facility ratings are B+/B1, with stable outlooks, and there is a 3 recovery rating on the loan from S&P Global Ratings. Hunter Douglas Inc. is the U.S. borrower, and Solis IV BV is the Dutch borrower. In its assessment, S&P Global Ratings noted that the deal is also backed by $3.2 billion in equity, and a portion of the debt is intended to support acquisitions of smaller regional players in the coming months.

Additional financing will include a $750 million revolving credit facility due in 2027, undrawn at close, that will be subject to a springing first-lien leverage covenant.

Hunter Douglas makes blinds and shutters and has a leading market position in the global window covering sector. It operates a vertically integrated business and primarily serves residential markets through brands such as Hunter Douglas, Levolor, Hillarys and Blinds2go.

3G Capital announced its $7.1 billion acquisition of Hunter Douglas at the end of 2021 in a deal that values the Rotterdam, Netherlands-based company's shares at €175 each. The agreement will see Ralph Sonnenberg transfer his controlling interest to 3G with a squeeze-out for the company's Amsterdam-listed shares to follow on closing. The Sonnenberg family will retain a 25% stake in the new structure.

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