ACCO enters five-year restated credit agreement via Bank of America

By Tali Rackner

Norfolk, Va., Feb. 1 – ACCO Brands Corp. entered into a third amended and restated credit agreement on Jan. 27 with Bank of America, NA as administrative agent in connection with subsidiary ACCO Europe Ltd.’s acquisition of Esselte Group Holdings AB, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement provides for a five-year senior secured credit facility, which consists of a €300 million term loan A facility, an A$$80 million term loan A facility and a $400 million multi-currency revolving credit facility.

There is an up to $500 million accordion option.

The facilities mature on Jan. 27, 2022.

Initial interest is Libor plus 200 basis points. The spread over Libor ranges from 125 bps to 250 bps, depending on ACCO’s consolidated leverage ratio.

The commitment fee on undrawn amounts under the revolver ranges from 25 bps to 40 bps. At closing, the fee was 35 bps.

Amounts under the revolver are non-amortizing, the filing said. Beginning June 30, the outstanding principal amounts under both term loan A facilities will be payable in quarterly installments in an amount representing, on an annual basis, 5% of the initial aggregate principal amount of the respective loan facility and increasing to 12.5% on an annual basis by June 30, 2020.

Certain financial covenants require ACCO to maintain a maximum consolidated leverage ratio as of the end of any fiscal quarter of 3.75 times; provided that following the consummation of a material acquisition, and as of the end of the fiscal quarter in which such acquisition occurred and as of the end of the three fiscal quarters thereafter, the maximum consolidated leverage ratio level will increase by 0.50 times, provided that no more than one increase can be in effect at any time.

The agreement also requires the company to maintain a minimum consolidated fixed charge coverage ratio as of the end of any fiscal quarter of 1.25 times, according to the 8-K.

At closing, additional borrowings under the revolver of $91.3 million were applied toward, among other things: (a) The repayment of all outstanding dollar-denominated term loans under the prior credit agreement; (b) the repayment of a portion of the Australian dollar-denominated term loans under the prior credit agreement, of which A$80 million outstanding principal amount was continued under the Australian term loan A; and (c) the payment of related financing fees and expenses.

Immediately following the effective date, roughly $156.7 million was available for borrowing under the revolver.

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

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