Rexnord Corp. (RXN:US), the industrial components maker majority owned by Apollo Global Management LLC (APO:US), is seeking a $1.95 billion term loan to refinance existing borrowings and redeem bonds.
The seven-year debt may pay interest at 3 percentage points to 3.25 percentage points more than the London interbank offered rate, according to a person with knowledge of the deal who asked not to be identified because the terms aren’t set. The benchmark will have a minimum of 1 percent.
Proceeds of the new loan will be used by two of the company’s subsidiaries to refinance senior-secured facilities and repurchase, redeem, or discharge all of their outstanding 8.5 percent notes due 2018, Rexnord said today in a statement. The units also are seeking to modify certain provisions of their revolving credit agreement, the company said.
Rexnord is proposing to sell the term loan at 99 cents on the dollar, the person said, reducing proceeds for the Milwaukee-based company and increasing the yield to investors. Lenders are being offered a six-month soft-call protection of 101 cents, meaning Rexnord would have to pay 1 cent more than face value to refinance the debt within the first six months, according to the person.
Credit Suisse Group AG is arranging the transaction and commitments are due by Aug. 14. In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t.
RBS Global Inc., a unit that manufactures and sells process and motion-control and water-management products, and Rexnord LLC, a maker of mechanical power-transmission and water-management components, have $786 million in loans coming due in 2018 and $1.15 billion in 2018 bonds, according to data compiled by Bloomberg.
The parent company ended a search for a buyer for all or parts of itself after bids failed to meet expectations, Bloomberg News reported in May.
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