Copeland term loan B could be reduced by up to $450 million term A

By Sara Rosenberg

New York, May 5 – Copeland’s $2.725 billion seven-year term loan B (Ba3/BB-/BB+) may potentially be reduced ahead of closing by a term loan A of up to $450 million, according to a market source.

The term loan B, which allocated and freed to trade on Thursday, is priced at SOFR plus 300 basis points with a 25 bps step-down at 3.25x first-lien net leverage, a 0% floor and an original issue discount of 99.

The term loan B has 101 soft call protection for six months and amortization of 1% per annum.

During syndication, the term loan B was downsized from $2.75 billion as the company’s U.S. senior secured notes offering was increased to $2.275 billion from $2.25 billion, and pricing was reduced from SOFR plus 350 bps.

RBC Capital Markets, Barclays, Wells Fargo Securities LLC, SMBC, Goldman Sachs Bank USA, BNP Paribas Securities Corp., HSBC Securities (USA) Inc., JPMorgan Chase Bank, Mizuho, Truist, BofA Securities Inc., MUFG, Bank of Nova Scotia, TD Securities (USA) LLC, CIBC, Regions, Fifth Third and US Bank are the leads on the deal.

Proceeds from the term loan B, U.S. notes and €455 million of senior secured notes will be used with equity to fund the acquisition by Blackstone of a majority stake in Emerson Electric Co.’s Climate Technologies business (Copeland) for an aggregate purchase price of $14 billion.

Under the agreement, Emerson will receive upfront, pre-tax cash proceeds of about $9.5 billion and a note of $2.25 billion at close and retain 45% common equity ownership in the new stand-alone joint venture.

Closing is expected in the first half of this year, subject to regulatory approvals and customary conditions.

Copeland is a manufacturer of mission critical, highly engineered heating, ventilation, air conditioning and refrigeration components.

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