GenCorp launches loan amendment to increase restricted payments basket, revise pricing

By Sara Rosenberg

New York, July 9 - GenCorp Inc. held a lender call on Wednesday to present a proposed amendment that would increase the restricted payments basket under its credit facility, raise pricing and add a Libor floor, according to a market source.

Recently, the company accidentally issued shares in its defined contribution 401(k) employee benefit plan that were not registered, and as a result, an offer must be made to buy back those shares for an amount equal to the purchase price paid for the securities - or if such security has been sold, to receive damages with respect to any loss incurred on such sale - plus interest from the date of purchase.

To fund the buyback, the company will use cash, which is way the restricted payments basket needs to be amended, the source explained.

In return for their approvals, lenders will see pricing on the credit facility increase by 100 basis points, so the revolver will carry pricing of Libor plus 275 bps, and the term loan and synthetic letter-of-credit facility will carry pricing of Libor plus 325 bps, the source said.

Furthermore, a 3% Libor floor will be added to all tranches under the credit facility, the source continued.

Lenders will not be getting an amendment fee.

Consents are due on July 21.

Wachovia is the lead bank on the deal.

GenCorp is a Rancho Cordova, Calif., technology-based manufacturer of aerospace and defense products and systems with a real estate segment that includes activities related to the entitlement, sale and leasing of the company's excess real estate assets.

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