Generac launches $800 million term loan B at Libor plus 450 bps

By Sara Rosenberg

New York, May 10 - Generac Power Systems Inc. launched its $800 million six-year term loan B (B1) on Thursday morning with price talk of Libor plus 450 basis points with a 1.25% Libor floor and an original issue discount of 981/2, according to a market source.

The loan has 101 soft call protection for one year, the source said.

J.P. Morgan Securities LLC is the left lead bank on the deal.

Proceeds will be used to refinance about $574 million of existing term loan debt and to pay a special cash dividend of up to $10 per share on its outstanding common stock that is expected to be done before the end of this quarter.

Other funds for the transaction will come from $400 million of senior unsecured debt.

Company officials said earlier that they anticipate the overall cost of debt to total around 7%.

Leverage will be increasing to around 5 times because of the additional debt. Current net debt leverage is around 2 times.

In addition, the company expects to refinance an existing $150 million undrawn revolver with a similarly sized asset-backed revolver.

Generac is a Waukesha, Wis.-based designer and manufacturer of generators and other engine powered products.

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