Zep readies launch of $402.5 million credit facility for Wednesday

By Sara Rosenberg

New York, June 1 – Zep Inc. scheduled a bank meeting for noon ET on Wednesday to launch its $402.5 senior secured credit facility, according to a market source.

Jefferies Finance LLC, KeyBanc Capital Markets Inc. and Credit Suisse Securities (USA) LLC are the leads on the debt.

As previously reported, the facility consists of a $42.5 million five-year revolver and a $360 million seven-year term loan B.

Based on filings with the Securities and Exchange Commission, 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 filings also said that the revolver has a 50 bps undrawn fee that can step-down to 37.5 bps based on net first-lien leverage, and the term loan has amortization of 1% per annum.

Proceeds will be used to help fund the buyout of the company by New Mountain Capital LLC 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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