Hub launches $775 million credit facility

By Sara Rosenberg

New York, May 21 - Hub International Ltd. held a bank meeting at 2:30 p.m. ET on Monday to launch its proposed $775 million credit facility, according to a market source.

Morgan Stanley and Merrill Lynch are joint bookrunners and joint lead arrangers on the deal, with Morgan Stanley the administrative agent and Merrill Lynch the syndication agent.

The facility consists of a $100 million six-year revolver, a $535 million seven-year term loan and a $140 million seven-year final maturity delayed-draw term loan, with all three tranches talked at Libor plus 275 basis points, the source said.

The delayed-draw term loan has an unused fee of 137.5 bps that steps up by 25 bps every six months, the source added.

Proceeds will be used to help fund the buyout of Hub by Apax Partners and Morgan Stanley Principal Investments for $41.50 per share in cash and to refinance certain existing indebtedness, including $75 million of 6.43% senior notes due April 4, 2016, $7.5 million of 5.71% senior notes due April 4, 2011 and $55 million of 6.16% senior notes due June 15, 2013.

The delayed-draw term loan will be available to, among other things, finance permitted acquisitions and for general corporate purposes.

The structure of the credit facility is somewhat different than what the company had previously outlined under filings with the Securities and Exchange Commission.

Most recently, the company's SEC filings had said that it would be getting an $825 million senior secured credit facility, consisting of a $100 million revolver, a $100 million seven-year delayed-draw term loan and a $625 million term loan. This structure was announced after the buyout price was raised from $40.00 per share to $41.50 per share.

And, under the original purchase agreement, the company was planning on getting a $795 million senior secured credit facility, consisting of a $100 million revolver, a $100 million delayed-draw term loan and a $595 million term loan.

Hub is a Chicago-based insurance broker.

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