Flowserve gets $1.25 billion term loan, revolver at Libor plus 150 bps

By Susanna Moon

Chicago, Aug. 20 - Flowserve Corp. said it refinanced its loans with a $400 million term loan and an $850 million revolver at a reduced rate of Libor plus 150 basis points after being upgraded to investment grade.

Interest on the loans now ranges from 112.5 bps to 200 bps, based on the company's ratings. The rate was reduced from Libor plus 200 bps under the company's previous facility.

The unused fee ranges from 15 bps to 35 bps.

Subject to certain conditions, the company may increase the amount of the term loan or the revolver by an aggregate amount not to exceed $250 million.

The revolver includes a $300 million sublimit for the issuance of letters of credit and a $30 million sublimit for swingline loans.

The company closed the $1.25 billion credit agreement due Aug. 20, 2017 with Bank of America Merrill Lynch, Credit Agricole Corporate & Investment Bank NY, J.P. Morgan Securities, LLC and Wells Fargo Securities, LLC as the lead arrangers and book managers, according to an 8-K filing with the Securities and Exchange Commission.

Bank of America, NA is the swingline lender, letter-of-credit issuer and administrative agent. Credit Agricole Corporate & Investment Bank, JPMorgan Chase Bank, NA and Wells Fargo Bank, NA are co-syndication agents. Bank of Tokyo Mitsubishi UFJ, Ltd., Mizuho Corporate Bank, Ltd., Royal Bank of Scotland plc, PNC Bank NA and Lloyds TSB Bank plc are the co-documentation agents.

At closing, $400 million was advanced under the term loan, and about $222 million was drawn under the revolver. The company used all of the proceeds advanced under the term loan, along with about $217 million of proceeds drawn under the revolver, to retire the company's previous facility with Bank of America as administrative agent.

Also at closing, the company's outstanding letters of credit under the facility were transferred to the revolver.

Proceeds of the facility will be used to fund capital expenditures and other working capital needs.

The $1.25 billion five-year facility led by Bank of America Merrill Lynch replaces the company's facility - made up of a $500 million term loan and $500 million revolver - that would have matured in December 2015, according to a company press release.

"This new facility provides us additional debt capacity to execute on our growth initiatives, while also enhancing our operating flexibility and reducing our borrowing costs after attaining investment grade status by all three rating agencies," Mike Taff, Flowserve senior vice president and chief financial officer, said in the release.

"With the support of this new facility, we continue to evaluate additional, cost-effective debt financing as we implement our stated long-term gross leverage ratio target of 1.0x-2.0x total debt to EBITDA and execute on our announced $1 billion share repurchase program."

Flowserve is an Irving, Texas-based provider of flow control products and services for the infrastructure markets.

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