Reynolds Group credit facility amendment gets lender approval

By Sara Rosenberg

New York, July 22 - Reynolds Group has obtained sufficient lender consents for its credit facility amendment to pass, paving the way for the acquisition of Graham Packaging Co. Inc., according to a market source.

Under the amendment, the company is permitted to get the financing for the acquisition, which includes a new $2 billion senior secured term loan due August 2018 (Ba3/BB-),$1.5 billion of senior secured notes and $500 million of senior unsecured notes.

Price talk on the new term loan is Libor plus 525 basis points with a 1.25% Libor floor and an original issue discount of 99, and the existing term loan due February 2018 is being repriced at Libor plus 525 bps with a 1.25% Libor floor from Libor plus 325 bps with a 1% floor currently.

Also, the new term loan has two years of 101 soft call protection, and there will be 101 soft call protection for one year on the existing term loan.

There is a delayed-draw fee on the new term loan that is the full spread for 90 days from closing.

Credit Suisse Securities (USA) LLC and HSBC Securities (USA) Inc. are the lead banks on the deal for which commitments are due on Monday.

Existing lenders are being offered a 5 bps amendment fee.

Under the agreement, Reynolds is buying Graham for $25.50 per share, or a total of about $4.5 billion, including assumed debt.

Closing is expected in the second half of this year, subject to customary regulatory approvals and conditions, including the approval of Graham's stockholders.

Net senior secured leverage is 3.5 times and net total leverage is 6.0 times.

Reynolds is an Auckland, New Zealand-based manufacturer and supplier of consumer food and beverage packaging and storage products. Graham is a York, Pa.-based supplier of plastic containers.

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