Reynolds Group talks $2 billion term loan at Libor plus 525 bps

By Sara Rosenberg

New York, July 12 - Reynolds Group released price talk on its $2 billion senior secured term loan due August 2018 at Libor plus 525 basis points with a 1.25% Libor floor and an original issue discount of 99 as ratings on the loan came out at Ba3/BB-, according to a market source.

In connection with the new deal, the company is repricing its existing loan due February 2018 at Libor plus 525 bps with a 1.25% Libor floor from current pricing of Libor plus 325 bps with a 1% floor. There is no issue price on the existing loan because its not new money.

Commitments are due on July 25.

Credit Suisse Securities (USA) LLC and HSBC Securities (USA) Inc. are the lead banks on the deal that launched with a bank meeting on Monday.

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.

Pro forma for the anticipated financing, Reynolds Group estimates net senior secured leverage of 3.5 times and net total leverage of 6.0 times.

Closing is expected in the second half of this year, subject to customary regulatory approvals and closing conditions, including the approval of Graham's stockholders.

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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