Hubbell enters five-year $500 million term loan, $750 million revolver

By Marisa Wong

Morgantown, W.Va., Jan. 31 – Hubbell Inc. entered into a $500 million term loan agreement and a $750 million committed revolving credit facility on Jan. 31, according to an 8-K filing with the Securities and Exchange Commission.

JPMorgan Chase Bank, NA, Merrill Lynch, Pierce, Fenner & Smith Inc. and HSBC Securities (USA) Inc. are joint lead arrangers and joint bookrunners under both credit agreements. JPMorgan Chase Bank is administrative agent, with Bank of America, NA and HSBC Securities as syndication agents and Bank of New York Mellon, Citibank, NA, TD Bank, NA and Wells Fargo Bank, NA as documentation agents.

Term loan

Proceeds of the term loan will be used to partially finance Hubbell’s acquisition of Aclara Technologies LLC and to repay some of Aclara’s existing debt.

Availability under the term loan agreement, which has not yet been funded, is subject to some conditions related to the acquisition. The loans will be made in a single draw on the merger closing date and will be due and payable in full five years after the borrowing date.

The transaction, valued at $1.1 billion, is expected to be completed in the first quarter of 2018, as previously announced.

Borrowings will bear interest at Libor plus an applicable margin based on the company’s credit ratings. The applicable margin will range from 50 bps to 112.5 bps.

The loan agreement contains a financial covenant requiring that the ratio of total debt to total capitalization not be greater than 65% as of the last day of each fiscal quarter, beginning with the first quarter-end date occurring on or after the effective date of the term loan.

Revolver

Subsidiaries Hubbell Power Holdings Sarl and Harvey Hubbell Holdings Sarl are also borrowers under the five-year revolver. The parent company will guarantee the obligations of the subsidiary borrowers.

Commitments under the revolver may be increased to a total of up to $1.25 billion.

The facility includes a $50 million sub-limit for the issuance of letters of credit. The sum of the dollar amount of loans and letters of credits to the subsidiary borrowers is capped at $75 million.

Initial availability of revolving loans is conditioned on the Aclara acquisition and the termination of commitments under the company’s existing $750 million five-year revolver dated Dec. 16, 2015.

The revolver will be used for general corporate purposes, but the company may borrow up to $225 million of revolving loans on the merger closing date to partially finance the Aclara transactions.

Loans can be made in U.S. dollars, euro, pounds sterling, Canadian dollars, Swiss francs and other currencies.

Dollar-denominated loans will bear interest at Libor plus an applicable margin based on ratings. The applicable margin ranges from 46 bps to 97.5 bps.

There is also a facility fee ranging from 4 bps to 15 bps, depending on ratings.

Competitive loans may be advanced in dollars only.

Loans will be due and payable on the fifth anniversary of the availability date, when all of the conditions have been satisfied.

The revolver contains the same financial covenant as the term loan.

Hubbell is a Shelton, Conn.-based manufacturer of electrical and electronic products for non-residential and residential construction, industrial and utility applications. Aclara is a supplier of smart infrastructure solutions to water, gas and electric utilities and is an affiliate of Sun Capital Partners, Inc.

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