Allegion amends, extends facility; pricing cut to Libor plus 175 bps

By Susanna Moon

Chicago, Oct. 16 – Allegion plc amended and extended its senior credit facility, upsizing the term loan A facility to $975 million, according to an 8-K filing with the Securities and Exchange Commission.

Interest on the loans is initially Libor plus 175 basis points, with the spread ranging from 150 bps to 200 bps based on the company’s credit rating.

Pricing was reduced on the term loan A facility by 25 basis points, according to a company press release.

The unused fee was cut to 20 bps to 30 bps from 25 bps to 35 bps.

The maturity was extended to Oct. 15, 2019 from Sept. 27, 2018.

The company entered into the amended agreement Wednesday with JPMorgan Chase Bank, NA as administrative agent.

J.P. Morgan Securities LLC, BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs Bank USA, Bank of America Merrill Lynch and Wells Fargo Securities, LLC are the joint lead arrangers and joint bookrunners.

Bank of Tokyo-Mitsubishi UFJ, Ltd., BBVA Compass Bank, Fifth Third Bank, HSBC Bank USA, NA, Mizuho Bank Ltd, PNC Capital Markets LLC, TD Bank, NA and U.S. Bank NA are the documentation agents.

The amended terms also include the designation of the company as the primary borrower under the credit agreement and Allegion US Holding Inc. as the co-borrower.

The company also eased the restrictive covenants to provide additional flexibility under the credit terms.

The new term loan A will amortize in quarterly installments of 1.25% of the original principal amount during the first nine calendar quarters and at 2.5% after that. The first installment is due Dec. 31.

The company said it also repaid the outstanding term loan B facility with the additional proceeds from the term loan A.

The availability under the revolver remains unchanged and continues to permit borrowing of up to $500 million, with up to $100 million available for the issue of letters of credit, and including a swingline facility for up to $50 million.

“The new credit facility lowers our cost of capital and continues to provide significant liquidity and flexibility to facilitate our capital allocation priorities including organic growth investments, funding acquisitions and shareholder distributions,” Patrick Shannon, Allegion senior vice president and chief financial officer, said in the press release.

“Assuming Libor rates remain constant, the refinancing would result in approximately $5 million of annual interest expense savings.”

In the fourth quarter, Allegion expects to incur a non-cash charge of about $4.5 million to write off the unamortized term loan B debt issuance costs.

Allegion is based in Carmel, Ind. and has its corporate headquarters in Dublin, Ireland. It provides security products.

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