Ashland extends commitment deadline for $750 million term loan B due to market conditions

By Paul A. Harris

St. Louis, Sept. 29 - Ashland Inc. has indefinitely extended the deadline for its $750 million seven-year term loan B, according to a market source, who added that commitments had previously been due on Monday.

The extension was prompted by "turmoil in the financial markets," added the source, who spoke well after the Monday close. The session's exceptional volatility, which saw the major U.S. stock indexes post losses of between 6.5% and 9%, ignited after the U.S. House of Representatives narrowly defeated the historic financial rescue package that had been sponsored by the Bush administration.

The Ashland term loan B has been talked at Libor plus 350 basis points.

The facility is also comprised of a $500 million five-year revolver talked at Libor plus 325 bps and a $500 million five-year term loan A talked at Libor plus 325 bps.

Bank of America and Scotia Capital are the joint lead arrangers and joint bookrunners on the credit facility, with Bank of America the administrative agent.

According to filings with the Securities and Exchange Commission, the deal will carry a 3% Libor floor.

Amortization on the term loan A is 5% in each of the first two years, 10% in the third year, 20% in the fourth year and 60% in the fifth year, while amortization on the term loan B is 1% per year for the first six years and 94% in the final year.

Financial covenants include a maximum leverage ratio and a minimum fixed-charge coverage ratio.

Proceeds will be used to help fund the acquisition of Hercules Inc. for $18.60 per share in cash and 0.093 of a share of Ashland common stock. The total transaction value is about $3.3 billion, including $0.7 billion of net assumed debt.

Other financing will come from $750 million of senior unsecured notes.

Closing is expected to occur by the end of the year, subject to the approval of Hercules' shareholders, the receipt of regulatory approvals and other customary conditions.

Ashland is a Covington, Ky., chemical company. Hercules is a Wilmington, Del., manufacturer and marketer of specialty chemicals.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.