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GCP Applied Tech Slashes Borrowing Cost Via $350M High Yield Offering

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GCP Applied Tech Slashes Borrowing Cost Via $350M High Yield Offering

GCP appliedGCP Applied Technologies (NYSE: GCP) today placed a $350 million high yield bond offering, pricing the deal at 5.5%, a significant savings for the construction products technologies company.

The deal was led by bookrunners Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs, Citi, PNC, and KeyBanc Capital Markets. Existing unsecured ratings are BB–/B1.

The borrower intends to use the proceeds from the new print, along with up to $50 million of borrowings under its credit facility and cash on hand, to redeem its $525 million of existing 9.5% notes due 2023. Proceeds may also be used for general corporate purposes.

Analysts at S&P Global Ratings expect that, post today’s transaction, GCP Applied’s debt levels represent roughly a 50% reduction in book debt, compared with June 2017 levels. This is also partly due to the company paying down its debt with a portion of the proceeds from the $1.05 billion sale of its Darex Packaging Technologies segment to Henkel, completed in July 2017.

In August 2016, GCP completed a $275 million repriced B term loan (L+325, 0.75% LIBOR floor).

Structure for today’s pitch includes an issuer-friendly first call, at par plus 50% of the coupon. The equity clawback will be for up to 40% at par, plus the coupon during the non-call period.

Cambridge, Mass.–based GCP Applied Technologies produces and sells specialty construction chemicals and specialty building materials worldwide. — Jakema Lewis

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