Sealed Air is pricing and allocating the $7.15 billion-equivalent cross-border loan and bond package supporting its buyout by Clayton, Dubilier & Rice today, after further revisions to both pricing and documentation.
In the latest round of changes, the global term loan B was reduced to $4.2 billion from $4.7 billion at launch, with the dollar senior secured notes upsized to $1.85 billion from $1.35 billion to offset the reduction. Soft call protection on the term loans was extended to 12 months from six months, and pricing step-downs were removed.
The latest update is as follows:
- Seven-year dollar term loan at S+400, offered at 95, from previous updates of S+400/95-96, S+400/97.5-98 and S+350-375/98.5 at launch; 101 soft call for 12 months (vs. six months), removal of pricing step-downs;
- Seven-year euro term loan at E+425, offered at 95, from previous updates of E+425/95-96, E+425/97.5-98 and E+375-400/98.5 at launch; 101 soft call for 12 months (vs. six months), removal of pricing step-downs;
- $1.85 billion of seven-year senior secured notes at 8.25% coupon / 8.5% yield, upsized from $1.35 billion, from price talk in the 8.5% area and IPTs of 8.25-8.50%;
- $600 million-equivalent of euro seven-year senior secured notes at 7.25% coupon / 7.5% yield, from price talk in the 7.5% area and IPTs of 7.25-7.50%;
- $500 million of eight-year senior unsecured notes at 10.5% coupon, priced at par, from price talk in the 10.5% area and IPTs of 10.25-10.50%.
Books closed on the dollar portions at 11 a.m. ET and on the euro tranches at 4 p.m. BST with allocations across all tranches expected this afternoon. JPMorgan is lead left bookrunner on the dollar loans, and BNP Paribas is lead on the euro loan. UBS, Goldman Sachs and BofA Securities are lead bookrunners on the dollar secured bonds, euro secured notes and dollar unsecured notes, respectively.
Documentation has been amended for the bonds and further amended for the loans, following an initial amendment on Wednesday. The revised documentation amends the so-called “Business Line Spin Transaction.”
Incurrence-based leverage caps were tightened across the board, with the first lien leverage ratio reduced to 5.30x from 5.50x, the secured leverage ratio to 6.05x from 6.25x, and the total leverage ratio to 6.55x from 6.75x.
The general restricted payments basket was cut from the greater of $1 billion or 75% of EBITDA to $665 million or 50% of EBITDA, limiting the sponsor’s ability to extract cash from the business via dividends or distributions. The builder basket formula was also tightened from a “greatest of three” to a “greater of two” calculation, reducing flexibility to justify larger payouts.
The asset sale reinvestment period was shortened from three years to two years, with the grace period for canceled projects halved from 365 to 180 days, giving lenders faster access to excess proceeds.
The look-forward period for pro forma cost savings and synergy add-backs to EBITDA was reduced from 36 months to 24 months. The “Earlier Maturity Date Basket” was reduced from the greater of $3.315 billion or 250% of EBITDA to $1.325 billion or 100% of EBITDA, restricting Seal Air’s capacity to issue shorter-dated debt that would rank ahead of the notes. There is also new basket permits debt incurred in connection with any spin transaction, provided such debt is non-recourse to the company and its restricted subsidiaries following completion.
Sealed Air is a global packaging group focused on perishable foods and parcel protection. Ratings are B+/B1 (issuer), B+/B1 with a 3 recovery rating (secured) and B/B3 with a 5 recovery rating (unsecured). Sword Purchaser LLC is the issuer.
Wells Fargo, Citi, Mizuho, RBC, Credit Agricole CIB, Deutsche Bank, HSBC, Jefferies, Natixis, Rabobank, SMBC, TD, Truist, CIBC, Citizens, Santander and US Bank make up the joint bookrunner group.
Featured image by gopixa/Getty Images/iStockphoto
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