Zep plans $402.5 million credit facility for buyout by New Mountain

By Sara Rosenberg

New York, May 6 – Zep Inc. has received a commitment for a $402.5 senior secured credit facility to help fund its acquisition by New Mountain Capital LLC, according to a PREM14A filed with the Securities and Exchange Commission on Wednesday.

Jefferies Finance LLC and KeyBanc Capital Markets Inc. are the leads on the debt.

The facility consists of a $42.5 million five-year revolver and a $360 million seven-year term loan.

Pricing on the revolver is expected at Libor plus 525 basis points with two 25 bps step-downs based on net first-lien leverage, and pricing on the term loan is expected at Libor plus 525 bps with a 25 bps step-down based on net first-lien leverage and a 1% Libor floor, the filing said.

The revolver has a 50 bps undrawn fee that can step-down to 37.5 bps based on net first-lien leverage.

Amortization on the term loan is 1% per annum.

Under the agreement, Zep is being purchased for $20.05 per share in cash. The transaction is valued at about $692 million, including net debt.

Other funds for the buyout will come from $382.5 million in equity.

Closing is expected in the third quarter, subject to stockholder and regulatory approvals.

Zep is an Atlanta-based consumable chemical packaged goods company.

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