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McGraw-Hill Education increases term loan size to $810 million
By Sara Rosenberg
New York, March 15 - McGraw-Hill Global Education Holdings LLC upsized its six-year covenant-light term loan to $810 million from a revised amount of $610 million and an initial size of $560 million, according to a market source.
Pricing on the term loan is Libor plus 775 basis points with a 1.25% Libor floor and an original issue discount of 97.
Upon the first upsizing, pricing on the loan was lifted from talk of Libor plus 650 bps to 700 bps and the discount was widened from 98.
The loan has 101 soft call protection for one year.
Recommitments are due at 5 p.m. ET on Friday.
The company's now $1.05 billion senior secured credit facility (B2/NA/BB), up from $850 million, also includes a $240 million five-year revolver.
Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding Inc., Jefferies & Co., UBS Investment Bank, Nomura and BMO Capital Markets Corp. are leading the deal.
Proceeds will be used to help fund the buyout of the company by Apollo Global Management LLC from McGraw-Hill Cos. for $2.5 billion, subject to certain closing adjustments.
Other funds for the transaction will come from $800 million of secured notes that were downsized from a most recent size of $1 billion and an initial size of $1.05 billion as a result of the term loan upsizings.
As part of the transaction, McGraw-Hill will receive an additional $150 million in cash at closing from the investment funds affiliated with Apollo Global Management, in lieu of being issued $250 million in face amount of unsecured notes by a holding company of McGraw-Hill Education.
The holding company notes were expected to carry an annual interest rate of 8½% until five years from closing and then pricing would have increased to 11% per annum.
Closing is subject to regulatory approval and customary conditions.
McGraw-Hill Education is a New York-based digital learning company.
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