Bloomberg News

Capital Safety Said to Remove Covenants From KKR Buyout Loan

December 16, 2011

(Updates with final term loan pricing.)

Dec. 15 (Bloomberg) -- Capital Safety Ltd., the U.K.-based safety-harness maker, removed the covenants from a $425 million term loan it’s seeking to back its $1.12 billion buyout by KKR & Co., according to a person with knowledge of the transaction.

The seven-year debt was increased by $50 million to $425 million and pricing was set at 5 percentage points more than the London interbank offered rate with a 1.25 percent minimum on the benchmark, said the person, who declined to be identified because the terms are private. The debt was initially offered at 5 percentage points to 5.25 percentage points more than Libor.

Capital Safety is proposing to sell the loan at 98 cents on the dollar, Bloomberg data show, reducing proceeds for the borrower and increasing the yield for investors.

UBS AG, Morgan Stanley and KKR Capital Markets are arranging the financing, said the person. The debt is expected to be distributed to investors tomorrow, the person said.

Capital Safety is also seeking a $45 million revolving line of credit due in five years that will pay 5 percentage points more than Libor with no minimum on the benchmark, the person said.

KKR agreed to purchase Capital Safety, which has offices in Red Wing, Minnesota, from Arle Capital Partners, Arle Capital said in a Nov. 28 statement. The deal is expected to be completed in January.

Kristi Huller, a spokeswoman for New York-based KKR, declined to comment.

In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t.

--Editors: Faris Khan, John Parry

To contact the reporter on this story: Michael Amato in New York at

To contact the editor responsible for this story: Faris Khan at

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