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Reynolds to hold bank meeting Monday for $1.5 billion credit facility
By Paul A. Harris
St. Louis, Sept. 10 - Reynolds Group Holdings Ltd. will hold a bank meeting on Monday for its $1.5 billion credit facility, according to a market source.
Credit Suisse, HSBC and Australia and New Zealand Banking Group are the lead banks on the financing, according to the market source.
The facility features a $1 billion term loan B that is structured according to an amendment to the company's existing term loan B.
Interest on the new term loan B is set at Libor plus 500 basis points, with a 2% Libor floor. Interest on the existing term loan B is increased to Libor plus 500 bps from Libor plus 425 bps.
In addition, Reynolds Group launched a new $500 million term loan A at Libor plus 450 bps, also with a 2% Libor floor.
Proceeds will be used to help fund the acquisition of Pactiv Corp.
Reynolds also plans to sell $3.5 billion of new bonds to help finance the acquisition. Of the $3.5 billion, $2 billion will be secured.
The timing for the launch of the bond deal remains to be determined, according to a syndicate source.
Credit Suisse will also quarterback the bond deal.
Other funds for the acquisition will come from roughly $2 billion in equity from Reynolds and its parent company, Rank Group Ltd.
Under the agreement, Pactiv shareholders will receive $33.25 in cash per share for a total purchase price of $4.6 billion. However, the transaction is valued at $6 billion.
Closing is targeted by the end of this year, subject to Pactiv shareholder approval, regulatory approvals and customary conditions. The acquisition is not conditioned on the receipt of equity or debt financing.
Reynolds is a Chicago-based manufacturer and supplier of consumer food and beverage packaging and storage products. Pactiv is a Lake Forest, Ill.-based consumer and foodservice/food packaging company.
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