Albemarle enters $1 billion term loan, amends existing revolver

By Marisa Wong

Madison, Wis., Aug. 21 – Albemarle Corp. entered into a term loan credit agreement on Aug. 15 for a tranche of senior unsecured term loans totaling $1 billion, according to an 8-K filing with the Securities and Exchange Commission.

Merrill Lynch, Pierce, Fenner & Smith Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the joint lead arrangers. Merrill Lynch, Pierce, Fenner & Smith Inc. is the bookrunner. Bank of America, NA is the administrative agent. JPMorgan Chase Bank, NA and Wells Fargo Bank, NA are co-syndication agents.

The term loan was made in connection with the proposed merger of Albemarle’s wholly owned subsidiary, Albemarle Holdings Corp., with and into Rockwood Holdings, Inc.

The term loan matures 364 days from the date of funding, which is expected to occur with the closing of the merger. The term loan is not subject to quarterly amortization and will be payable in full at maturity.

Loans bear interest at Libor plus an applicable margin ranging from 112.5 basis points to 250 bps, depending on the company’s credit rating. As of the closing of the term loan, the applicable margin over Libor was 112.5 bps.

The term loan requires compliance with one financial covenant, that the company’s maximum leverage ratio not exceed 4.5 to 1.0 as of the end of any fiscal quarter.

Also on Aug. 15, Albemarle amended its existing five-year, revolving unsecured credit facility dated Feb. 7, 2014 with Bank of America, NA as administrative agent, swingline lender and letter-of-credit issuer.

The amendment increased the maximum leverage ratio that the company is permitted to maintain to 4.5 times consolidated EBITDA for the first four quarters following the completion of the merger, stepping down by 0.25 on a quarterly basis after that until reaching 3.5 times consolidated EBITDA.

The amended revolver now provides that up to $100 million may be borrowed upon completion of the merger, subject only to a limited set of borrowing conditions.

In addition, the indebtedness covenant was amended to permit the incurrence of debt represented by Rockwood’s 4 5/8% notes due 2020 as long as the obligors under the Rockwood notes are also obligors under the revolver.

The new term loan and the amended revolver both provide that upon the earlier of (a) 70 days following the guarantee by the company or any of its subsidiaries (other than Rockwood or any of its existing subsidiaries) of the Rockwood notes or (b) the guarantee by the company or any of its subsidiaries of any senior notes issued in connection with the Rockwood acquisition, each such subsidiary that is an obligor of the Rockwood notes or the acquisition-related senior notes will guarantee the term loan or revolver, as applicable.

Baton Rouge, La.-based Albemarle is a manufacturer of polymers and fine chemicals.

Princeton, N.J.-based Rockwood is a specialty chemicals and advanced materials company and is a wholly owned subsidiary Rockwood Specialties Group, Inc.

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