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Unisource/xpedx $1.4 billion revolver expected at Libor plus 150 bps
By Sara Rosenberg
New York, Feb. 3 - The new company that will be formed through the merger of Unisource Worldwide Inc. and xpedx has received a commitment for a $1.4 billion five-year asset-based revolving credit facility that is priced at Libor plus 150 basis points with a 25 bps unused fee, according to an 8-K filed with the Securities and Exchange Commission on Monday.
The revolver is split between a $1.25 billion tranche A and a $150 million tranche A available to Unisource Canada Inc.
The company can get tranche A-1 debt that would be first-in last-out and carry pricing of Libor plus 275 bps. Any tranche A-1 loan would reduce the tranche A loan sizes by the equivalent amount.
Bank of America Merrill Lynch, Wells Fargo Bank and SunTrust Robinson Humphrey Inc. are the joint lead arrangers and joint bookrunners on the deal.
The financing will be used to fund a roughly $400 million cash payment to International Paper, parent company of xpedx, and refinance Unisource's existing debt.
Debt to EBITDA at the combined company is targeted in the range of 4 to 5 times.
Also, the new company will have projected annual revenue in the range of $9 billion to $10 billion.
The transaction will be accomplished through a Reverse Morris Trust structure. International Paper will contribute the assets of xpedx in exchange for stock in the company, the cash payment and potential for an additional cash payment pursuant to an earn-out in the sixth year after closing.
Following the spinoff of the new company to International Paper shareholders, Unisource will merge with xpedx.
Closing is expected mid-year, subject to certain conditions.
The new company will be based in Atlanta.
Norcross, Ga.-based Unisource and Loveland, Ohio-based xpedx are distribution services companies.
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