Keter sets price talk on €1.175B term loan refinancing

Price talk on the €1.175 billion term loan from resin-furniture maker Keter Plastic Ltd. is out at E+425-450 with a 0% floor, offered at 99.5, following a lender call earlier today. Replies are now due by 5 p.m. on Jan. 27 via a J.P. Morgan-led bookrunner group.

Guidance suggests a yield of 4.41%-4.67%, and proceeds from the seven-year term loan will refinance the company's secured facilities. The deal will come with six months of soft call protection

Ratings are now out at B/B3 for both issue and issuer with respective stable and positive outlooks. The recovery rating is 3.

Goldman Sachs, BofA Securities, Jefferies, RBC, BNP Paribas and MUFG make up the full bookrunner group.

Keter's loans date from a €690 million, E+425 term loan placed in October 2016 to support the buyout of the group by BC Partners and PSP Investments, which was increased via a €320 million add-on in February 2017 and a €95 million add-on in September 2018. The last add-on was priced at 91, and the group's loans were then volatile, falling as far as the low 70s in early 2019 before recovering to bounce around in the 80s through that year. They had moved into the 90s just before the COVID-19-led collapse of the entire market in March 2020 and then steadily recovered, pushing up toward par by the first quarter of 2021.

The secondary performance reflected operating challenges and high leverage that also brought ratings downgrades. S&P Global Ratings, for example, downgraded the group by one notch to B- in March 2019 and then to CCC+ in September 2019 before moving the group back to B- in September 2020. Moody's upgraded the firm from Caa1 to B3 in March 2021, moving the firm onto positive watch earlier today.

In its ratings assessment published Jan. 17, S&P Global Ratings pointed to a strong operational performance in 2021 based on both consumer demand and Keter's pricing and innovation strategies. This supports deleveraging, and Ratings expects the firm's performance to remain resilient in the next 12 months.

Keter makes resin-based household and garden products such as patio furniture, sheds, storage items and planters. The company filed for a potential New York IPO in September 2021.