PQ upsizes term loan to $1.22 billion, cuts bonds to $600 million

By Sara Rosenberg

New York, Oct. 29 - PQ Corp. increased its first-lien term loan to $1.22 billion from $1.1 billion and downsized its bond offering to $600 million from $720 million, according to a market source.

Also, the Libor floor on the term loan was revised to 1% from 1.25% and the original issue discount tightened to 99¼ from 99, the source said.

The spread on the term loan was left unchanged at Libor plus 425 basis points.

The term loan still has 101 soft call protection for one year.

The company's now $1.37 billion 41/2-year credit facility (B2/B+), up from $1.25 billion, also provides for a $150 million revolver.

Included in the credit facility is a maximum net first-lien leverage covenant that was revised to 5.75 times with step-downs until it hits 3.75 times in the first quarter of 2017, the source added. Initially, the covenant was expected to open at 5.25 times and have step-downs until it hit 3.25 times in the first quarter of 2017.

Pro forma leverage is 4.5 times through the first-lien and 6.7 times total. Net leverage is 4.3 times through the first-lien and 6.5 times total.

Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Barclays, Jefferies & Co., Morgan Stanley Senior Funding Inc. and Mizuho Securities USA Inc. are the lead banks on the deal.

Proceeds from the credit facility and notes will be used to refinance existing bank debt.

PQ is a Malvern, Pa.-based producer of specialty inorganic performance chemicals and catalysts.

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