Prince International Corp. has launched a $1.945 billion first-lien term loan that is part of the financing package backing its acquisition of Ferro Corp. and subsequent merger with Chromaflo Technologies Corp., according to sources. A lender call is scheduled for today at 10 a.m. ET and commitments are due by 5 p.m. ET on Feb. 1.
Price talk for the seven-year covenant-lite TLB is a spread in the range of 425-450 basis points over the secured overnight financing rate plus a credit spread adjustment, with a 0.5% floor and an issue price of 99.5. The CSA is 10 bps for the one-month rate, 15 bps for the three-month rate, and 25 bps for the six-month rate. Lenders are offered six months of 101 soft call protection.
At talk, the yield to maturity is 4.93%-5.19%.
Credit Suisse, Barclays, Goldman Sachs, Jefferies, KeyBanc Capital Markets, Deutsche Bank, HSBC and BofA Securities are joint lead arrangers on the deal.
Proceeds will be used to finance the merger and to repay debt outstanding at Prince, Chromaflo and Ferro. Additional financing comprises a $325 million revolving credit facility due 2027, $500 million of secured notes due 2029, and $756 million of senior unsecured notes due 2030. The revolver will have a springing first-lien leverage covenant.
S&P Global Ratings assigned a first-lien facility rating of B- and an unsecured rating of CCC+, with recovery ratings of 3 and 5, respectively. The corporate rating is B- and the outlook is stable. Investors are being told to expect corporate and first-lien ratings of B3 from Moody's. PMHC II Inc. is the borrower.
Prince, a portfolio company of American Securities, announced on May 11, 2021, that it is acquiring Ferro for $22 per share in cash, in a transaction valued at approximately $2.1 billion, including the assumption of net debt. In conjunction with the closing of that transaction, the company will combine with Chromaflo, which is also owned by American Securities.
Prince's existing loans include a covenant-lite first-lien term loan due March 2025 (L+350, 1% Libor floor) and a second-lien term loan due March 2026 (L+775, 1% floor) that were placed in 2018 to finance the buyout of the company by American Securities. Chromaflo has a first-lien term loan due November 2023 (L+350, 1% floor) and a second-lien term loan that was privately placed as part of a refinancing in April 2021. As of Sept. 30, 2021, Ferro had $355 million outstanding of its term loan facility due 2024 (L+225, 0% floor).
Houston-based Prince is a manufacturer of specialty products for applications in the construction, electronics, consumer products, agriculture, automotive, oil & gas, industrial and other end markets. Ferro is a supplier of functional coatings and color solutions. Chromaflo is a global provider of colorant technology solutions.
