Tenneco launches $1.4 billion term loan B at SOFR plus 500 bps

By Sara Rosenberg

New York, Nov. 1 – Tenneco Inc. (Pegasus Merger Co.) launched on Tuesday its $1.4 billion six-year covenant-lite senior secured term loan B (B) with price talk of SOFR+10 basis points CSA plus 500 bps with a 0.5% floor and an original issue discount of 84 to 85, according to a market source.

The term loan B has 101 soft call protection for six months, the source said.

Security is a perfected first priority lien on all of the equity interests of the borrower directly held by Holdings and substantially all tangible and intangible assets of the borrower and subsidiary guarantors, limited to 65% of the capital stock of first tier foreign subsidiaries and subject to other customary exceptions.

The company’s $3.3 billion of credit facilities (B) also include a $600 million revolver and a $1.3 billion term loan A.

Citigroup Global Markets Inc., BofA Securities Inc., Barclays, BNP Paribas Securities Corp., Jefferies LLC, RBC Capital Markets, TD Securities (USA) LLC, Wells Fargo Securities LLC, Deutsche Bank Securities Inc., BMO Capital Markets, Credit Suisse Securities (USA) LLC, Goldman Sachs Bank USA, ING, Mizuho, MUFG, Santander and U.S. Bank are the joint lead arrangers on the deal. Citigroup is the administrative agent.

Commitments are due at noon ET on Nov. 14, the source added.

Allocations are expected on Nov. 15.

Proceeds will be used with $1 billion of senior secured notes, a $750 million senior secured bridge facility, a $1 billion senior unsecured bridge facility, $1.718 billion of equity and cash from the balance sheet to fund the buyout of Tenneco by Apollo, refinance existing debt, and pay related fees and expenses.

Under the agreement, Tenneco is being purchased for $20.00 per share. The transaction has an enterprise valuation of about $7.1 billion, including debt.

Closing is expected in mid-November.

Tenneco is a Lake Forest, Ill.-based designer, manufacturer and marketer of automotive products for original equipment and aftermarket customers.

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