R.R. Donnelley, Donnelley Financial, LSC Communications get facilities

By Angela McDaniels

Tacoma, Wash., Oct. 3 – R.R. Donnelley & Sons Co., Donnelley Financial Solutions, Inc. and LSC Communications, Inc. entered into credit agreements on Friday in connection with R.R. Donnelley’s spinoff of 80.75% of Donnelley Financial and 80.75% of LSC Communications, according to 8-K filing with the Securities and Exchange Commission.

The spinoffs were completed on Saturday.

R.R. Donnelley entered into an amended and restated credit agreement that provides for an $800 million revolving credit facility due Sept. 30, 2021.

The interest rate is Libor plus a margin that ranges from 212.5 basis points to 250 bps, based on the leverage ratio of the company and its restricted subsidiaries. The facility fee ranges from 37.5 bps to 50 bps.

The amended and restated revolver has a $100 million accordion feature that can be used to increase the revolving commitments or to add term loans.

The amended and restated revolver requires that R.R. Donnelley maintain a maximum secured leverage ratio of 1.5 times and a maximum leverage ratio, as of the last day of each quarter, of 5 times for the quarters ending on or after Dec. 31 and prior to Sept. 30, 2017, 4.75 times for quarters ending on or after Sept. 30, 2017 and prior to March 31, 2018, 4.5 times for quarters ending on or after March 31, 2018 and prior to March 31, 2019, 4.25 times for quarters ending on or after March 31, 2019 and prior to March 31, 2020 and 4 times for quarters ending on or after March 31, 2020.

The joint lead arrangers and bookrunners are Bank of America, NA, Capital One Securities, Inc., Citigroup Global Markets Inc., Fifth Third Securities, Inc., ING Bank NV, JPMorgan Chase Bank, NA, PNC Capital Markets LLC, SunTrust Robinson Humphrey, Inc., MUFG, U.S. Bank NA and Wells Fargo Securities LLC.

Bank of America is the administrative agent. Citigroup and JPMorgan are the co-syndication agents. Capital One, Fifth Third, ING Bank, PNC, SunTrust Bank, MUFG, U.S. Bank and Wells Fargo Bank, NA are the documentation agents.

Donnelley Financial agreement

On Friday, Donnelley Financial Solutions entered into a credit agreement that provides for a $350 million seven-year senior secured term loan B and a $300 million five-year senior secured revolving credit facility.

The interest rate for the term loan is Libor plus 400 bps, subject to a 1% Libor floor, and the interest rate for the revolver is Libor plus a margin that ranges from 212.5 bps to 275 bps based on the consolidated leverage ratio. The facility fee for the revolver ranges from 37.5 bps to 50 bps.

The term loan will amortize in equal quarterly installments in aggregate annual amounts equal to 5% of the original principal amount.

The term loan is subject to standard mandatory prepayment provisions including 100% of the net cash proceeds in excess of $5 million from any asset disposition or casualty event, 100% of the net cash proceeds from the issuance or incurrence after the financing closing date of additional debt and 50% of annual excess cash flow.

The company may add one or more incremental term loans and/or increase commitments under the revolver in an unlimited amount so long as the consolidated secured leverage ratio, calculated on a pro forma basis, is 2.5 times or less.

The company plans to use some of the proceeds to fund a distribution to R.R. Donnelley and will use the remainder to pay fees and expenses and for general corporate purposes, including the financing of permitted investments.

The credit facilities are guaranteed by some direct and indirect material subsidiaries of the company. They are not guaranteed by the company’s foreign subsidiaries or unrestricted subsidiaries.

The joint lead arrangers and bookrunners are JPMorgan, Bank of America, Citigroup, Capital One, Fifth Third, ING Bank, PNC, SunTrust, MUFG, U.S. Bank and Wells Fargo.

JPMorgan is the administrative agent. Bank of America and Citigroup are the co-syndication agents. Capital One, Fifth Third, ING Bank, PNC, SunTrust Bank, MUFG, U.S. Bank and Wells Fargo Bank are the documentation agents.

LSC Communications agreement

LSC Communications entered into a credit agreement that provides for a $375 million seven-year senior secured term loan B and a $400 million five-year first-lien senior secured revolving credit facility.

The interest rate is Libor plus 600 bps for the term loan with a 1% Libor floor. For the revolver, it is Libor plus a margin that ranges from 275 bps to 325 bps based on the consolidated leverage ratio. The facility fee on the revolver ranges from 37.5 bps to 50 bps.

The term loan will amortize in quarterly installments of $12.5 million for first eight quarters and $10,625,000 for subsequent quarters.

The term loan is subject to standard mandatory prepayment provisions including 100% of the net cash proceeds in excess of $10 million from any asset disposition or casualty event, 100% of the net cash proceeds from the issuance or incurrence after the financing closing date of additional debt and 50% of annual excess cash flow.

The company may add one or more incremental term loans and/or increase commitments under the revolver in an aggregate principal amount not to exceed the greater of $50 million and any other amount so long as the consolidated secured leverage ratio, calculated on a pro forma basis, is equal to or less than 2 times.

The company plans to use some of the proceeds to fund a distribution to R.R. Donnelley and will use the remainder to pay fees and expenses and for general corporate purposes, including the financing of permitted investments.

The credit facilities will be guaranteed by some direct and indirect material subsidiaries of the company. They are not guaranteed by LSC’s foreign subsidiaries or unrestricted subsidiaries.

The joint lead arrangers and bookrunners are Bank of America, JPMorgan Citigroup, Capital One, Fifth Third, ING Bank, PNC, SunTrust, MUFG, U.S. Bank and Wells Fargo.

Bank of America is the administrative agent. JPMorgan and Citigroup are the co-syndication agents. Capital One, Fifth Third, ING Bank, PNC, SunTrust Bank, MUFG, U.S. Bank and Wells Fargo Bank are the documentation agents.

R.R. Donnelley provides integrated communication services. Donnelley Financial is a financial communications services company. LSC Communications is a publishing and retail-centric print services and office products company. Each is based in Chicago.

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