Ascend Performance Materials LLC (0196649D), the manufacturer of man-made fibers partially owned by SK Capital Partners LP, is seeking a $550 million term loan to pay a dividend to shareholders and refinance debt, according to a person with knowledge of the transaction.
The debt, due in six years, will pay interest at 5.5 percentage points to 5.75 percentage points more than the London interbank offered rate, said the person, who declined to be identified because the terms are private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1.25 percent floor.
Ascend is proposing to sell the loan at 98 cents on the dollar, reducing proceeds for the company and boosting the yield to investors, the person said.
The company will not be able to refinance the debt during the first year, then can do so at 101 cents on the dollar in the second year. The loan is covenant-lite, meaning it doesn’t have financial maintenance requirements.
Bank of America Corp., Jefferies Group Inc., Morgan Stanley and Wells Fargo & Co. are arranging the financing for the Houston-based company and will host a lender meeting today at 2:00 p.m. in New York, the person said.
Barry Siadat, co-founder of SK Capital, didn’t immediately respond to an e-mail seeking comment.
In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan it can’t.
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