Crown Holdings term loan debt potentially launching next week

By Sara Rosenberg

New York, Jan. 3 – Crown Holdings Inc. is expected to launch its new term loan debt sometime this month, with it possible that the deal may come to market as early as next week, a market source said.

The company has received a commitment for an up to $4 billion seven-year term loan B, but it is anticipated that the financing will actually be split between U.S. and euro loans and bonds, the source added.

Citigroup Global Markets Inc. is the lead bank on the deal.

Proceeds will be used to help fund the acquisition of Signode Industrial Group Holdings (Bermuda) Ltd. from the Carlyle Group in a cash transaction valued at $3.91 billion, subject to customary closing adjustments.

Upon announcing the transaction last month, company officials said in a conference call that the debt is expected to have a blended interest rate of around 3½%.

Pro forma net leverage will be 5.1 times as of Sept. 30, 2017 and total net leverage will be 5.3 times as of Sept. 30, 2017. Net leverage is anticipated to decrease by 0.5 times per year.

Closing is expected this quarter, subject to review by various competition authorities.

On Dec. 28, the company amended its existing credit agreement to permit incurrence of debt for the Signode acquisition, according to an 8-K filed with the Securities and Exchange Commission on Wednesday.

The amendment, upon closing of the acquisition, includes a customary excess cash flow mandatory prepayment, extends the timetable for compliance with the total leverage ratios and increases the amount of the revolving facility.

Deutsche Bank is the administrative agent on the existing credit agreement.

Crown Holdings is a Philadelphia-based provider of consumer packaging. Signode is a Glenview, Ill.-based provider of transit packaging systems and solutions.

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