ACCO enters into $780 million five-year restated credit facility

By Marisa Wong

Madison, Wis., May 13 - ACCO Brands Corp. entered into an amended and restated credit agreement with Bank of America, NA as administrative agent, providing for a $780 million five-year senior secured credit facility, according to an 8-K filing with the Securities and Exchange Commission.

The restated credit agreement, effective May 13, amends and restates an existing credit agreement dated March 26, 2012 entered into in connection with the company's acquisition of MeadWestvaco Corp.'s consumer and office products business.

The filing stated that in connection with the restated agreement, the company

• Replaced its existing U.S. dollar-denominated senior secured term A loan due May 2017, which had $220.8 million outstanding, with a new $530 million dollar-denominated senior secured term A loan due May 13, 2018;

• Prepaid in full its existing U.S. dollar-denominated senior secured term B loan due May 2019, which had $310.2 million outstanding, using a portion of the proceeds from the restated term A loan; and

• Replaced the $250 million revolving credit facility under the prior credit agreement with a current $250 million revolving facility due May 13, 2018, under which $47.3 million was outstanding upon closing.

Prior to the effective date of the restated facility, the company's Canadian dollar-denominated senior secured term A loan due May 2017, drawn under the prior agreement, had been fully repaid.

Interest for the restated term A loan and the revolver is Libor plus 175 basis points to 250 bps, depending on the company's consolidated leverage ratio, with no Libor floor. At closing, the applicable margin was 225 bps, reduced from the 300 bps in effect before the amendment.

Immediately following the effective date, $191.3 million was available for borrowing under the revolver. Undrawn amounts will be subject to a commitment fee of 25 bps to 50 bps, again depending on the company's consolidated leverage ratio. At closing, the commitment fee rate was 0.375%.

Amounts under the revolver will be non-amortizing. Beginning on Sept. 30, the outstanding principal amount under the restated term A loan will be payable in quarterly installments in an amount representing, on an annual basis, 5% of the initial total principal amount and increasing to 12.5% of the initial total principal amount by June 30, 2016.

The restated agreement requires the company to prepay outstanding loans using cash proceeds from asset sales and additional debt, as well as with excess cash flow based on leverage.

In addition, the facility contains financial covenants, including a maximum consolidated leverage ratio of 4.5 to 1 through June 30, 2014, 4 to 1 from July 1, 2014 through June 30, 2015, 3.75 to 1 from July 1, 2015 through June 30, 2017, 3.5 to 1 from July 1, 2017 and after.

Beginning with the fiscal quarter ending June 30, the company must also maintain a consolidated fixed charge coverage ratio as of the end of any fiscal quarter at or above 1.25 to 1.

However, under the restated agreement, the company is no longer required to meet the minimum interest coverage ratios that were in the prior agreement.

Merrill Lynch, Pierce, Fenner & Smith Inc., Barclays Bank plc, BMO Capital Markets and SunTrust Robinson Humphrey, Inc. are the joint lead arrangers and joint bookrunners of the restated facility. Barclays, Bank of Montreal and SunTrust Bank are syndication agents; Compass Bank, PNC Bank, NA and Wells Fargo Bank, NA are documentation agents; and Fifth Third Bank is senior managing agent.

ACCO is a branded office product supplier based in Lake Zurich, Ill.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.