ACCO Brands ups term A to $320 million, term B to $450 million

By Sara Rosenberg

New York, Feb. 29 - ACCO Brands Corp. increased its five-year term loan A to $320 million from $300 million and its seven-year term loan B to $450 million from $370 million, according to a market source.

Proceeds from the additional borrowings will be used to redeem some of the company's 7 5/8% senior subordinated notes.

Pricing on the term loan A, as well as on a $250 million five-year revolver, is Libor plus 300 basis points, and pricing on the term loan B is Libor plus 325 bps with a 1% Libor floor and an original issue discount of 99.

The term loan B, which was flexed down earlier from Libor plus 375 bps, includes 101 soft call protection for one year.

Recommitments towards the now $1.02 billion senior secured credit facility (Ba2/BB+/BB+), up from $920 million, are due at the close of business Thursday.

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

In addition to the redeeming the 7 5/8% notes, proceeds from the credit facility will fund the company's merger with MeadWestvaco's office supplies business, repay ACCO's 10 5/8% senior secured notes and pay for ongoing working capital requirements.

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 second quarter, subject to approval by ACCO shareholders. Hart-Scott-Rodino and Canada Competition Act clearance have already been obtained.

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

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