Zep sets $550 million term loan at Libor plus 400 bps, tightens OID

By Sara Rosenberg

New York, Aug. 11 – Zep Inc. firmed pricing on its $550 million covenant-light first-lien term loan (B2/B-) at Libor plus 400 basis points, the low end of the Libor plus 400 bps to 425 bps talk, according to a market source.

Also, the original issue discount on the first-lien term loan was changed to 99.5 from 99, the source said.

The term loan still has a 1% Libor floor and 101 soft call protection for six months.

The company’s $770 million of credit facilities also include a $45 million revolver (B2/B-) and a $175 million covenant-light second-lien term loan (Caa2/CCC).

Pricing on the second-lien term loan remained at Libor plus 825 bps with a 1% Libor floor and a discount of 98, and the loan still has hard call protection of 102 in year one and 101 in year two.

The credit facilities began trading on Friday, with the first-lien term loan breaking at par bid, the source added.

KeyBanc Capital Markets LLC is the lead on the deal.

Proceeds will be used to refinance existing debt, to finance a distribution and to fund an acquisition.

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

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