PQ Corp. makes further spread cuts to $1.2 billion term loans

By Paul A. Harris

Portland, Ore., April 26 – PQ Corp. further tightened spread talk on $1.2 billion equivalent of 6.5-year senior secured covenant-light term loans (B2/B+), a market source said on Tuesday.

New talk has the package – $900 million of dollar-denominated paper and $300 million equivalent of euro-denominated paper – coming at 475 basis points spreads to Libor and Euribor.

That shaves 25 bps from earlier talk of 500 bps, which was itself a revision from still earlier talk of 550 bps.

Commitments were due at the Tuesday close, and the deal is set to allocate on Wednesday.

The spreads will float atop 1% Libor and Euribor floors.

The discount remains at 99. Earlier in the week it was revised by one dollar from the rich end of the previous 97.5 to 98 discount talk.

The 101 soft call protection from repricing, which was cut earlier in the week to six months from a year, remains unchanged in the Tuesday revision.

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.

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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