PQ tightens $900 million covenant-light loan terms; books close Tuesday

By Paul A. Harris

Portland, Ore., April 25 – PQ Corp. tightened the terms on its $900 million 6.5-year senior secured covenant-light term loan (B2/B+), a market source said on Monday.

The spread to Libor tightens to 500 basis points from 550 bps.

The discount is cut by a dollar to 99 from the rich end of the earlier 97.5 to 98 discount talk.

The 101 soft call protection from repricing is cut to six month from a year.

Commitments are due at 5 p.m. ET on Tuesday, and the loan is expected to allocate on Wednesday.

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.

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 $300 million equivalent euro-denominated senior secured covenant-light term loan

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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