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Reynolds Group readies launch of $2 billion term loan for Monday
By Sara Rosenberg
New York, July 7 - Reynolds Group has scheduled a bank meeting for Monday in New York to launch a $2 billion senior secured term loan, according to sources.
Credit Suisse Securities (USA) LLC and HSBC Securities (USA) Inc. are the lead banks on the deal.
The term loan is being obtained pursuant to an amendment to the company's existing credit agreement.
Proceeds will be used to fund the purchase of Graham Packaging Co. Inc. for $25.50 per share, or a total of about $4.5 billion, including assumed debt.
Other funds for the transaction will come from $1.5 billion of senior secured debt, $500 million of senior unsecured debt and cash on hand.
Previously, the company had said that it was expecting to get $5 billion of new debt for the acquisition in the form of new term loans, the issuance of notes or other debt.
Pro forma for the anticipated financing, Reynolds Group estimates net senior secured leverage of under 3.5 times and net total leverage of 6.0 times.
The transaction is expected to close in the second half of this year, subject to customary regulatory approvals and closing conditions, including the approval of Graham's stockholders.
In connection with the acquisition, on Thursday, Graham commenced tender offers for its 9.875% senior subordinated notes due Oct. 7, 2014, 8.25% senior notes due Jan. 1, 2017 and 8.25% senior notes due Oct. 1, 2018.
Any Graham debt that remains outstanding following the acquisition of Graham is not expected to benefit from guarantees or security from Reynolds Group and its subsidiaries.
Reynolds Group is an Auckland, New Zealand-based manufacturer and supplier of consumer food and beverage packaging and storage products. Graham is a York, Pa.-based supplier of plastic containers.
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