Colfax firms Thursday launch for $2.1 billion credit facility

By Sara Rosenberg

New York, Nov. 7 - Colfax Corp. officially set the bank meeting for its proposed $2.1 billion credit facility (Ba2/BB+) for 11 a.m. ET on Thursday, according to a market source.

A senior managing agent meeting was held last week.

Deutsche Bank Securities Inc. and HSBC Securities (USA) Inc. are the lead banks on the deal.

The facility consists of a $300 million revolver, a $200 million term A-1 tranche, a $700 million term A-2 tranche and a $900 million term loan B.

Price talk on the revolver and term loan As is Libor plus 300 basis points.

Official talk on the term loan B is not yet out, but guys are expecting it in the Libor plus low-400 bps area. Previous filings with the Securities and Exchange Commission had the B loan pricing at Libor plus 400 bps with a 1.25% Libor floor.

Financial covenants include a maximum total leverage ratio and a minimum interest coverage ratio.

Proceeds, along with $805 million of new equity from certain existing shareholders and BDT Capital Partners and the issuance of $480 million of shares, will be used to fund the purchase of Charter International plc for 910p per share, or roughly $14.45, comprised of 730p in cash and a fixed ratio of 0.1241 of a Colfax common share per share. The total consideration is $2.43 billion.

Closing is expected in the first quarter of 2012, subject to approval of both companies' shareholders, court approval in Jersey and other terms and conditions.

Colfax is a Fulton. Md.-based supplier of fluid-handling products, including pumps, fluid handling systems and controls and specialty valves. Charter International is a Dublin-based owner of ESAB, a welding, cutting and automation business, and Howden, an air and gas handling business.

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