ACCO Brands to launch $920 million credit facility on Thursday

By Sara Rosenberg

New York, Jan. 30 - ACCO Brands Corp. is set to hold a bank meeting on Thursday to launch a proposed $920 million senior secured credit facility (Ba2), according to sources.

Barclays Capital Inc., Bank of America Merrill Lynch and Bank of Montreal are the lead banks on the debt.

The facility consists of a $250 million revolver, a $300 million term loan A and a $370 million term loan B, sources said.

Originally, the company had received a commitment for an $845 million senior secured credit facility, comprised of a $480 million seven-year term loan, a $190 million seven-year term loan at Spinco and a $175 million five-year multicurrency asset-based revolver. But, it has been rumored for a while that the structure could change to include a cash revolver, term loan A and term loan B.

Under the original commitment, pricing on the term loans was expected at Libor plus 475 basis points with a 1.25% Libor floor, and there was anticipated to be 101 soft call protection for one year.

Proceeds will be used to fund the company's merger with MeadWestvaco's office supplies business, to repay ACCO's 10 5/8% senior secured notes and for ongoing working capital requirements.

Additionally, the company is expected to get $270 million in bonds that are backed by a senior unsecured bridge loan commitment.

The merger with the Consumer & Office Products business is valued at roughly $860 million, and at completion, MeadWestvaco shareholders will own 50.5% of the combined company.

Specifically, MeadWestvaco will establish a separate entity to hold the consumer & office products business, the shares of which will be distributed to MeadWestvaco shareholders in a tax-free transaction in return for a $460 million dividend to MeadWestvaco from the new entity. Immediately after the spin-off and distribution, the newly formed company will merge with a subsidiary of ACCO.

Closing is expected in the first half of this year, subject to approval by ACCO shareholders and the satisfaction of customary closing conditions and regulatory approvals, including a ruling from the U.S. Internal Revenue Service on the tax-free nature of the transaction.

ACCO Brands is a Lincolnshire, Ill.-based office supply manufacturer.

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