Circor readies launch of $785 million term loan B for Friday

By Sara Rosenberg

New York, Nov. 8 – Circor International Inc. is scheduled to hold a bank meeting at 10 a.m. ET in New York on Friday to launch its proposed $785 million seven-year covenant-light term loan B, according to a market source.

Deutsche Bank Securities Inc., SunTrust Robinson Humphrey Inc., Citizens Bank and HSBC Securities (USA) Inc. are the bookrunners on the deal.

The term loan includes a 1% Libor floor and 101 soft call protection for six months, the source said.

Commitments are due at 5 p.m. ET on Nov. 20.

Proceeds will be used to help fund the acquisition of Colfax Fluid Handling and to refinance existing debt.

Based on the commitment letter, the company is also expected to get a $150 million five-year revolver.

As committed, the spread on the revolver and term loan is anticipated to be Libor plus 425 basis points, and the revolver is expected to have a 50 bps commitment fee that can step-down to 37.5 bps based on first-lien net leverage.

Under the agreement, Colfax Fluid Handling is being bought from Colfax Corp. for about $855 million, including $542 million in cash, the issuance of about 3.3 million in new Circor shares to Colfax and the assumption of pension plans with a net liability of $150 million on a pre-tax basis linked to the Colfax Fluid Handling business.

The combination results in estimated pro forma combined revenues of around $1.1 billion based on the trailing 12-month results as of June 2017.

Net debt to EBITDA at closing will be around 5 times. The company expects to reduce leverage to below 4 times by the end of 2018 and to around 3 times by the end of 2019.

Closing is expected by the end of the year, subject to regulatory approvals and other customary conditions.

Circor is a Burlington, Mass.-based designer, manufacturer and marketer of highly engineered products and sub-systems for markets including oil & gas, power generation and aerospace & defense. Colfax Fluid Handling is a provider of engineering, development‚ manufacturing‚ distribution‚ service and support of fluid handling systems.

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