Regal Beloit secures amended, restated $1.4 billion credit agreement

By Sarah Lizee

Olympia, Wash., Aug. 28 – Regal Beloit Corp. entered into an amended and restated credit agreement on Monday with JPMorgan Chase Bank, NA as administrative agent, providing for $500 million of unsecured revolving credit facilities and a $900 million unsecured term loan facility, according to an 8-K filing with the Securities and Exchange Commission.

The facilities mature in August 2023.

Borrowings bear interest at Libor plus a margin that ranges from 112.5 basis points to 175 bps, and the non-use fee ranges from 12.5 bps to 27.5 bps, both depending on the funded debt to EBITDA ratio. Initially, interest is Libor plus 137.5 bps and the non-use fee is 17.5 bps.

Loans under the term loan facility require quarterly amortization at a rate starting at 5% per annum, increasing to 7.5% per annum after three years and further increasing to 10% per annum for the last year, with a balloon payment of the entire remaining outstanding principal balance due at maturity.

The company may request incremental term loans and/or increase revolving commitments by a total of up to the greater of $500 million and an amount equal to 100% of the company’s consolidated net income before EBITDA for the most recently ended four consecutive fiscal quarter period, provided that some conditions are satisfied.

The company’s obligations under the credit agreement are currently guaranteed by Regal Beloit America, Inc. The company will guarantee all borrowings by any subsidiary under the credit agreement.

Covenants include a maximum leverage ratio as of the last day of any fiscal quarter of 3.75 to 1, subject to the company’s right to temporarily increase the maximum leverage ratio to up to 4 to 1 in connection with some material acquisitions, and a minimum interest coverage ratio of 3 to 1 as of the last day of any fiscal quarter.

JPMorgan, U.S. Bank NA, Wells Fargo Securities, LLC, Bank of America Merrill Lynch and PNC Capital Markets LLC are joint lead arrangers and bookrunners. U.S. Bank, Wells Fargo Bank, NA, Bank of America, NA and PNC Bank, NA are co-syndication agents.

Branch Banking and Trust Co. and TD Bank, NA are senior managing agents, and BMO Harris Bank NA, BBVA Compass, Fifth Third Bank, HSBC Bank USA, NA, Mizuho Bank, Ltd., MUFG Bank, Ltd., Regions Bank, Sumitomo Mitsui Banking Corp. and SunTrust Bank are co-documentation agents.

On Monday, the company borrowed $900 million under the term loan facility and $37.4 million under the revolving credit facilities. Term loan proceeds may be used for general corporate purposes, and the revolver may be used for capital expenditures, working capital and general corporate purposes.

The credit agreement replaces the company’s existing credit agreement with JPMorgan that was scheduled to mature on Jan. 30, 2020. The prior credit agreement was terminated on Monday.

Regal Beloit manufactures electric motors, mechanical and electrical motion controls and power generation products and is based in Beloit, Wis.

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