Bloomberg News

Hilex Boosts Pricing on $135 Million Dividend Loan

November 08, 2010

Hilex Poly Co., the maker of plastic bags and packaging films owned by a unit of TPG Capital, increased pricing a second time for a $135 million term loan it’s seeking to fund a dividend and recapitalize the company, according to a person familiar with the negotiations.

The company increased the interest rate by 0.25 percentage point to 9.25 percentage points more than the London interbank offered rate, said the person, who declined to be identified because the terms are private. Libor, the rate banks charge to lend to each other, will have a 2 percent floor, which is unchanged.

Hilex will issue the five-year debt at 97 cents on the dollar, the person said. The so-called original-issue discount, which reduces proceeds for the borrower and boosts the yield for investors, was previously set at 98 cents.

Under the revised terms, lenders will also get a hard-call protection of 104 cents, the person said, meaning the Hartsville, South Carolina-based company would have to pay 4 cents more than face value to repay the debt during its first year. The premium drops to 2 cents over par during year two.

Deutsche Bank AG and General Electric Capital Corp. started marketing the loan Sept. 23, according to data compiled by Bloomberg. Lenders have until 5 p.m. in New York to submit commitments to the banks, the person said.

Joyce Foster, a spokeswoman for Hilex, declined to comment on the transaction.

Moody’s Investors Service rates the proposed debt B3 and Standard & Poor’s assigned it a B ranking. The company was acquired by TPG Growth, an arm of Fort Worth, Texas-based private-equity firm TPG, S&P said.

Private-equity firms pool money from investors and obtain debt to finance takeovers with the intention of selling the companies later for a profit.

To contact the reporter on this story: Emre Peker in New York at epeker2@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net.


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