PQ Corp. launches $900 million term loan at Libor plus 550 bps

By Sara Rosenberg

New York, April 14 – PQ Corp. launched to U.S. investors on Thursday a $900 million 6.5-year senior secured covenant-light term loan that is talked at Libor plus 550 basis points with a 1% Libor floor and an original issue discount of 97.5 to 98, according to a market source.

Included in the term loan is 101 soft call protection for one year, the source said.

The term loan has a springing maturity six months inside the existing notes at Eco Services Operations LLC if the notes have not been refinanced.

Amortization on the term loan is 1% per annum.

Mandatory prepayments are from 50% of excess cash flow with leverage-based step-downs, 100% of asset sale proceeds subject to reinvestment rights and certain other exceptions, and 100% of debt issuance subject to permitted debt, the source continued.

The company also plans on getting a roughly $300 million equivalent euro-denominated senior secured covenant-light term loan that will launch to European investors with a bank meeting in London on Friday.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding Inc., J.P. Morgan Securities LLC, Jefferies Finance LLC, Goldman Sachs Bank USA, Deutsche Bank Securities Inc. and Keybanc Capital Markets are the joint lead arrangers on the deal, with Citigroup the left lead and Credit Suisse the administrative agent.

Commitments are due at 5 p.m. ET on April 28, the source added.

Proceeds will be used to refinance credit facilities at PQ and Eco Services and PQ’s second-lien notes concurrent with the merger of the two companies.

Closing is expected in early May.

PQ is a Malvern, Pa.-based producer of specialty inorganic performance chemicals and catalysts. Eco Services is a Woodlands, Texas-based producer of sulfuric acid.

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