USG granted court OK to enter into commitment letter for $2.8 billion exit facility

By Caroline Salls

Pittsburgh, June 7 - USG Corp. obtained court approval to enter a commitment and fee letter with JPMorgan Chase Bank NA, J.P. Morgan Securities Inc. and Goldman Sachs Credit Partners LP for up to $2.8 billion in exit financing, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The exit facility includes a $650 million five-year revolving credit facility, with $250 million available for letters of credit; a $1 billion five-year term loan and a $1.15 billion tax bridge term loan facility.

Revolver proceeds will be used to pay off the company's debtor-in-possession facility, to pay unsecured and administrative claims and for working capital and general corporate purposes. Term loan proceeds will be used to fund payments on a contingent note payable to the company's asbestos personal injury trust. The tax bridge loan will be used for prepayments of the asbestos personal injury contingent note.

The revolver will also include a swingline facility.

Two options will be available under the revolver, a competitive advance option and a revolving credit option.

The draw period expiration date for the term loan is Jan. 31, 2007 and can be extended six months depending on the passage of asbestos litigation.

The entire amount of the tax bridge term loan will be due in a single installment two years and six months after the closing date.

Interest will be based on the loans' ratings.

For the revolver, if it is rated A3 or above by Moody's Investors Service or A- or above by Standard & Poor's, interest will be Libor plus 29.5 basis points, with an 8.0 bps commitment fee; for ratings Baa1/BBB+, interest will be Libor plus 40.0 bps, with a 10.0 bps commitment fee; Baa2/BBB ratings, interest will be Libor plus 50.0 bps, 12.5 bps commitment fee; Baa3/BBB-, interest will be Libor plus 60.0 bps, 15.0 bps commitment fee; Ba1/BB+ rating, interest will be Libor plus 70.0 bps, 17.5 bps commitment fee; Ba2/BB rating, interest will be Libor plus 87.5 bps, 37.5 bps commitment fee; and Ba3/BB-, interest will be Libor plus 100.0 bps, 50 bps commitment fee.

For the term loan and tax bridge facility, if the loan is rated A3/A- or above, interest will be Libor plus 37.5 bps, with an 8.0 bps ticking fee; Baa1/BBB+, Libor plus 50.0 bps, 10.0 bps ticking fee; Baa2/BBB, Libor plus 62.5 basis points, 12.5 bps ticking fee; Baa3/BBB-, Libor plus 75.0 bps, 15.0 bps ticking fee; Ba1/BB+, Libor plus 87.5 bps, 17.5 bps ticking fee; Ba2/BB, Libor plus 125.0 bps, 37.5 bps ticking fee; and Ba3/BB- or below, Libor plus 150.0 bps, 50.0 bps ticking fee.

USG, a Chicago-based building materials company, filed for bankruptcy June 25, 2001. Its Chapter 11 case number is 01-02094.

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