Bloomberg News

Ameriforge Said to Set Rate on $500 Million of Buyout Loans

January 09, 2013

Ameriforge Group Inc. set the rate it will pay on $500 million of loans it’s seeking to back its buyout by First Reserve Corp., according to a person with knowledge of the transaction.

A $350 million first-lien term loan will pay interest at 4 percentage points more than the London interbank offered rate, said the person, who asked not to be identified because the information is private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1.25 percent floor.

Ameriforge is proposing to sell the loan at 99 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.

A $150 million second-lien term piece will pay 7.75 percentage points more than Libor with a 1.25 percent floor and is expected to be sold at 98 cents, according to the person.

Deutsche Bank AG is arranging the financing for the producer of forged products for the oil and gas industry, according to data compiled by Bloomberg. The first-lien debt is rated B1 by Moody’s Investors Service and B+ by Standard & Poor’s, while the second-lien portion is graded Caa1 and CCC+.

First Reserve, the private-equity firm that has raised $23.1 billion of capital since it was founded 29 years ago, is acquiring the Houston-based company from Post Oak Companies LP for an undisclosed amount, according to a Nov. 27 statement.

Caroline Harris, a spokeswoman for First Reserve, declined to comment.

First-lien debt is repaid first in a bankruptcy or liquidation, second-lien borrowings are repaid next.

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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