Flavors Holdings reworks first- and second-lien loan sizes and pricing

By Sara Rosenberg

New York, Oct. 2 – Flavors Holdings Inc. downsized its six-year first-lien term loan to $350 million from $365 million and its seven-year second-lien term loan to $50 million from $75 million, according to a market source.

Also, pricing on the first-lien term loan was increased to Libor plus 575 basis points from Libor plus 550 bps and pricing on the second-lien term loan was lifted to Libor plus 1,000 bps from Libor plus 950 bps, the source said.

In addition, the original issue discount on the first-lien term loan widened to 96 from 99, and the discount on the second-lien loan was changed to 96 from 98˝.

Furthermore, the call protection on the second-lien term loan is now non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four, instead of 103 in year one, 102 in year two and 101 in year three, the source said.

Other changes included sweetening first-lien term loan amortization to 5% from 1% and increasing the excess cash flow sweep to 75% with step-downs from 50% with step-downs.

Both term loans still have a 1% Libor floor, and the first-lien term loan still has 101 soft call protection for one year.

The company’s now $450 million credit facility, down from $490 million, also provides for a $50 million revolver.

Recommitments are due at 5 p.m. ET on Friday.

Credit Suisse Securities (USA) LLC, Jefferies Finance LLC, Deutsche Bank Securities Inc. and PNC Capital Markets are the lead banks on the deal.

Proceeds will be used to fund the acquisition of Merisant Co., a producer of low-calorie tabletop sweeteners, by Mafco Worldwide, a Camden, N.J.-based manufacturer of licorice extract and related derivatives for use as flavoring and moistening agents.

As a result of the reduction in term loan debt, the cash equity for the transaction was increased to $60 million from $35 million and the drawn revolver amount was modified to $21 million from $15million, the source added.

First-lien net leverage is 3.8 times, down from 3.9 times under the original proposal, and total net leverage is 4.3 times, down from 4.7 times previously.

Flavors is a provider of flavoring and sweetening products and solutions.

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