Bloomberg News

Sealed Air Said to Set Rate on $1.2 Billion Acquisition Loan

September 13, 2011

(Updates with financing details in sixth paragraph.)

Sept. 13 (Bloomberg) -- Sealed Air Corp., the maker of Bubble Wrap, set the interest rate it will pay on a $1.2 billion term loan B to back its purchase of Diversey Holdings Inc., according to two people with knowledge of the matter.

The packaging manufacturer is proposing to pay four percentage points more than the London interbank offered rate with a one percent minimum on the lending benchmark, said the people, who declined to be identified because the terms are private.

Sealed Air, based in Elmwood Park, New Jersey, may sell the seven-year debt at 97 cents on the dollar, the people said, reducing proceeds for the borrower and boosting the yield for investors.

Lenders must let Citigroup Inc., Bank of America Corp., BNP Paribas SA and Royal Bank of Scotland Group Plc, the banks arranging the deal know by Sept. 23 whether they will participate in the deal, the people said.

Amanda Butler, director of investor relations at Sealed Air, didn’t immediately return a phone call seeking comment.

Lenders are offered one year of soft-call protection of 101 cents, the people said, meaning that the company would have to pay a one cent premium to reprice the debt in its first year.

About $275 million of the loan will be denominated in euros, according to the people. That portion of debt will pay 4.5 percentage points more than Euribor, with a one percent floor.

Sealed Air, agreed to pay Diversey shareholders $2.1 billion in cash and 31.7 million shares of Sealed Air stock, the packaging maker said June 1. The purchase also includes $1.4 billion of net debt to be refinanced, for a total cost of $4.3 billion.

Revolving Credit

The acquisition financing includes a $1.1 billion term loan A due and a $700 million revolving line of credit. Both facilities are due in five years and pay 2.5 percentage points more than Libor, the people said. The debt may be prepaid at face value at any time.

Lenders to the term loan B may receive portions of the loan on Sept. 26, according to the people. The transaction is expected to close in October.

A term loan B is sold mainly to non-bank lenders such as collateralized loan obligations, bank loan mutual funds and hedge funds. A term loan A is sold mainly to banks. In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t.

--Editors: Chapin Wright, Faris Khan

3477438Z <Equity> SEE <Equity> 86634Z <Equity>

To contact the reporters on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net; Michael Amato in New York at mamato3@bloomberg.net.

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


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus