Regal Rexnord provides financing details regarding merger

Chicago, Oct. 7 – Regal Beloit Corp. closed its merger on Monday with the process and motion control business of Rexnord Corp. (now Zurn Water Solutions Corp.) to create the new Regal Rexnord Corp., according to an 8-K filing with the Securities and Exchange Commission.

In connection with the transaction, Regal Rexnord detailed the related bank loan financing.

On May 14, Land Newco, Inc., which had been a subsidiary of Rexnord that had held all of the assets and assumed all of the liabilities of the process and motion control business, entered into a delayed-draw term loan for $486.8 million.

The facility matures Aug. 25, 2023.

Proceeds were used to fund a payment from Land to a subsidiary of Rexnord in connection with the separation agreement.

Land is now an indirect wholly owned subsidiary of Regal Rexnord, and the credit agreement has been amended and restated accordingly.

Interest on the facility is based on Libor plus a margin tied to the company’s consolidated funded debt EBITDA ratio. Interest moves between Libor plus 112.5 basis points and 175 bps.

The ratio of consolidated funded debt to EBITDA cannot be more than 4x, and the minimum interest coverage ratio must be at least 3x.

JPMorgan Chase Bank, NA is the administrative agent. JPMorgan Chase Bank, NA and Barclays are joint lead arrangers and joint bookrunners.

Regal Rexnord also drew on its amended and restated credit facility from March 17 to finance a special dividend related to the transaction.

The amendment allowed for the transaction and increased borrowings under the revolver by $250 million.

The amended and restated credit agreement, with JPMorgan Chase Bank, NA as administrative agent, now has around $1 billion drawn, consisting of $380 million outstanding on the revolver and $620 million outstanding under the term loan.

Additionally, the $1.126 billion bridge facility has been terminated.

Regal Rexnord manufactures electric motors, mechanical and electrical motion controls and power generation products and is based in Beloit, Wis.

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