Meritas updates spread, Libor floor and discount on second-lien loan

By Sara Rosenberg

New York, July 17 – Meritas School Holdings LLC firmed pricing on its $80 million 6½-year second-lien term loan (Caa2/CCC+) at Libor plus 900 basis points, the low end of the Libor plus 900 bps to 925 bps talk, according to a market source.

Also, the Libor floor was reduced to 1% from 1.25% and the original issue discount was tightened to 99½ from 98½, the source said.

Still included in the loan is call protection of 103 in year one, 102 in year two and 101 in year three, and maximum total leverage and minimum fixed charge coverage covenants.

Recommitments were due at 5 p.m. ET on Thursday, the source added.

Credit Suisse Securities (USA) LLC and BMO Capital Markets are the lead banks on the deal.

Proceeds will be used to fund a dividend recapitalization.

In addition, the company is seeking an amendment to its existing first-lien loan that will permit the second-lien loan and dividend and will reset the 101 soft call protection for six months.

First-lien lenders are being offered a 15 bps amendment fee.

Meritas is a Northbrook, Ill.-based family of private college-preparatory schools.

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