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Fairmount ups spread on $1 billion term loan B to Libor plus 400 bps
By Sara Rosenberg
New York, March 9 - Fairmount Minerals Ltd. increased pricing on its $1 billion six-year term loan B (B1/BB-) to Libor plus 400 basis points from talk of Libor plus 350 bps to 375 bps, according to a market source.
In addition, the loan is now being sold at an original issue discount of 991/2, as opposed to par, the source said.
The 1.25% Libor floor and 101 soft call protection for one year were left unchanged.
Recommitments were due from lenders at 5 p.m. ET on Wednesday, and allocation may go out later this week.
Barclays, KeyBank, Bank of America Merrill Lynch and PNC are the lead banks on the deal.
Proceeds will be used to fund a $300 million dividend and to repay existing term loan A and term loan B debt that was obtained in connection with the company's buyout by American Securities.
In August 2010, the company got a $150 million term loan A and a $550 million term loan B, with the tranches priced at Libor plus 450 bps with a 1.75% Libor floor, and both were sold at an original issue discount of 981/2. Pricing on the A loan and the B loan includes a step-down to Libor plus 425 bps when leverage is less than 2.75 times and after receipt of June 30 financials.
As a result of 101 soft call protection for one year, the term loan B will be paid down at 101. The term loan A is being repaid at par.
However, lenders under the company's term loan A and $75 million revolver are being offered a 25 bps amendment fee to permit the refinancing and revise covenants.
Under the covenant changes, the interest coverage ratio and capital expenditures requirement will be eliminated, and the leverage ratio will become fixed at 4.75 times throughout the life of the deal instead of having steps.
The company has over $250 million of LTM EBITDA and, pro forma leverage for the dividend, recapitalization will be 4.0 times.
Fairmount Minerals is a Chardon, Ohio-based producer of industrial sand.
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