Reynolds $835 million term loan launches at Libor plus 500 bps

By Sara Rosenberg

New York, Oct. 20 - Reynolds launched its $835 million term loan on Tuesday with price talk of Libor plus 500 basis points with a 2% Libor floor, and the original issue discount is being guided at 97 to 98, according to a market source.

Prior to the launch, investors were being told that price talk would be in the range of Libor plus 450 bps to 500 bps with an original issue discount of 98.

Credit Suisse is the lead bank on the deal.

The roughly $1.45 billion credit facility also includes a $120 million revolver, an €80 million revolver and a €250 million term loan.

Proceeds will be used to help fund the acquisition of Closure Systems International and Reynolds Consumer Products by Beverage Packaging Holdings, the holding company of SIG Group.

Other funds for the acquisition will come from $1.1 billion of senior secured notes, €450 million of senior secured notes, €116 million of existing cash and €500 million of equity.

In addition to helping fund the acquisition, the senior secured debt will repay existing bank borrowings at Beverage Packaging of around €485 million and repay existing Reynolds debt.

The total purchase price for the companies is $3.023 billion, or 7.7 times LTM adjusted pro forma EBITDA.

Closing is expected to take place in the fourth quarter and the combined entity will assume the Reynolds name.

Reynolds is a manufacturer of aluminum foil, wraps and bags. Closure Systems is a manufacturer of plastic caps and closures, primarily serving the beverage market. And, Beverage Packaging is a manufacturer of aseptic carton packaging systems.

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