Cabot Microelectronics to launch $1.07 billion term loan on Monday

By Sara Rosenberg

New York, Oct. 18 – Cabot Microelectronics Corp. is scheduled to hold a bank meeting on Monday to launch its $1,065,000,000 seven-year term loan B, according to a market source.

The company’s $1,265,000,000 of senior secured credit facilities (Ba2) also include a $200 million revolver.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch and Goldman Sachs Bank USA are the leads on the deal.

Price talk on the term loan is Libor plus 200 basis points to 225 bps with a 0% Libor floor and an original issue discount of 99.75, the source said.

The term loan has 101 soft call protection for six months.

Commitments are due at noon ET on Nov. 1, the source added.

Proceeds will be used to help fund the acquisition of KMG Chemicals Inc. and refinance KMG’s existing debt.

Under the agreement, KMG shareholders will be entitled to receive per share $55.65 in cash and 0.2 of a share of Cabot Microelectronics common stock. The transaction is valued at about $1.6 billion.

The combined company is expected to have annual revenues of around $1 billion and about $320 million in EBITDA, including synergies.

Closing is subject to customary conditions, including HSR clearance and approval by KMG shareholders.

Cabot is an Aurora, Ill.-based supplier of chemical mechanical planarization polishing slurries and CMP pads to the semiconductor industry. KMG is a Fort Worth-based producer and distributor of specialty chemicals and performance materials for the semiconductor, industrial wood preservation, and pipeline and energy markets.

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