"New Domtar" details $2.45 billion credit facility for merger of Weyerhaeuser Paper with Domtar

By Sara Rosenberg

New York, Nov. 21 - "New Domtar" came out with specifics on its proposed $2.45 billion senior secured credit facility that will be obtained as part of its formation from the combination of Weyerhaeuser Co.'s fine paper business with Domtar Inc., according to a 10-12B filed with the Securities and Exchange Commission Tuesday.

JPMorgan and Morgan Stanley are the lead banks on the deal.

The facility will consist of a $750 million five-year revolver and a $1.7 billion seven-year term loan B.

Pricing on the two tranches is expected at Libor plus 200 basis points if the debt is rated Ba3/BB- or at Libor plus 225 bps if the debt is rated lower than Ba3/BB-.

The term loan B can be increased by $325 million if it turns out to be necessary to refinance the existing accounts receivable securitization of Domtar and/or to redeem Domtar's $125 million of 9½% debentures if tendered as a result of a change of control offer.

Closing on the credit facility is expected to occur in February.

The company has received a commitment for a $1.35 billion three-month unsecured term loan that will be converted to be part of the seven-year term loan B.

This three-month loan will be drawn to finance a $1.35 billion cash payment by the company to Weyerhaeuser.

Under the transaction, Weyerhaeuser shareholders will get a 55% ownership in the new company and former Domtar shareholders will own 45% of the new company. The $1.35 billion cash payment, plus the stock valued at the closing price of Domtar stock on Aug. 22, results in a transaction value of $3.3 billion before considering resulting synergies.

"New Domtar" will be a Montreal, Quebec-based paper company.

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