Hexion revises terms for $1.4B term loan backing buyout; commitments due today

A Goldman Sachs-led arranger group has revised terms on the $1.4 billion first-lien term loan for Hexion Inc. backing the acquisition of the company by American Securities, according to sources. Recommitments are due by 2:30 p.m. ET today.

Price talk for the seven-year term loan is now 450 basis points over the secured overnight financing rate, plus a credit spread adjustment, with a 0.50% floor and an original issue discount of 97.5-98, from initial guidance of 425-450 bps over Sofr with an OID of 99-99.5. The credit spread adjustment has been revised to 10 bps for a one-month rate, 15 bps for a three-month rate and 25 bps for a six-month rate, updated from a flat 10 bps CSA previously. Lenders are still offered six months of 101 soft call protection.

At revised terms, yield to maturity is approximately 5.47%-5.56%.

Additionally, two leverage-based margin step-downs have been removed, and an IPO-based margin step-down has also been removed. There is also a ticking fee that will be 0% of the margin for the first 45 days and then is set at 50% of the margin for days 45-90, stepping to 100% of the margin thereafter.

The full arranger group also includes RBC Capital Markets, Morgan Stanley, BofA Securities, Deutsche Bank, Barclays and Jefferies.

The company in December 2021 agreed to be acquired by American Securities for $30 per share in cash. Financing will also include a $425 million privately placed second-lien term loan.

S&P Global Ratings has assigned facility ratings of B and B- to the first- and second-lien term loans, with 3 and 5 recovery ratings. Its issuer rating is B, with a negative outlook. First-lien and corporate ratings from Moody's are B2 and B3, respectively, with a stable outlook.

The issuer has a dollar-denominated first-lien term loan due July 2026 (L+350, 0% Libor floor) and a euro-denominated first-lien term loan due July 2026 (E+400, 0% floor) that were placed in July 2019 to refinance existing debt.

Hexion is a producer of adhesives and performance materials for the production of engineered wood products and other growing specialty materials.