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Zep arranges $250 million revolver, $75 million term loan via BofA
By Toni Weeks
San Luis Obispo, Calif., Aug. 26 – Zep Inc. entered into a $325 million five-year senior secured credit facility on Aug. 21 with Bank of America, NA as administrative agent, swingline lender and letter-of-credit issuer, according to an 8-K filing with the Securities and Exchange Commission.
The credit facility is comprised of a $250 million revolving loan facility and a $75 million term loan and may be boosted by an additional $100 million via an accordion feature.
Interest will be Libor plus 175 basis points to 300 bps based upon the company’s leverage ratio. There is a commitment fee of 25 bps to 50 bps and a LoC fee of 175 bps to 300 bps, also dependent on leverage.
“I am very pleased that we were able to refinance our credit facility at better rates and with more flexible debt covenants,” chairman, president and chief executive officer John K. Morgan said in a press release.
“Our first priority is to generate cash to pay down our existing debt balance, and this new facility will provide the strategic financial flexibility necessary to invest in the business while we continue to recover from the fire at our aerosol manufacturing plant.”
Rate advances may be denominated in a variety of currencies, including dollars.
The credit agreement contains financial covenants, including a maximum leverage ratio beginning at 4.50:1.00 with step-downs to 3.75:1.00 and a minimum fixed-charge coverage ratio of 1.25:1.00.
The agreement replaces the company’s five-year revolving credit agreement dated July 15, 2010.
KeyBank, NA and SunTrust Bank are co-syndication agents. BMO Harris Bank, NA and Compass Bank are co-documentation agents. BofA Merrill Lynch, KeyBank and SunTrust Robinson Humphrey, Inc. are the joint lead arrangers and joint bookrunners.
Zep is an Atlanta-based consumable chemical packaged goods company.
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