PQ Corp prices $900 million Libor plus 475 bps 6.5-year term loan at 99

By Paul A. Harris

Portland, Ore., April 27 – PQ Corp. priced its $900 million senior secured covenant-light term loan (B2/B+) with a 475 basis points spread to Libor at 99.00 on Wednesday, a market source said.

The deal broke to par 3/8 bid, par 7/8 offered, a market source said.

The spread floats atop a 1% Libor floor.

The spread and price came atop final price talk. Spread talk was revised from 500 bps, which was itself a revision from still earlier talk of 550 bps.

The discount came atop final price talk, which had been revised from earlier talk of 97.5 to 98

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

The $1.2 billion equivalent package also includes $300 million equivalent of euro-denominated paper pricing at the same levels and set to allocate Thursday, a source said.

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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