Kronos gets needed consents for credit facility amendment, extension

By Sara Rosenberg

New York, Dec. 21 - Kronos Inc. released new terms on its credit facility amendment and extension and its $370 million incremental first-lien term loan B (B1/B), following which, the required amount of approvals from lenders were obtained for the amendment and for the extension of more than 50% of each tranche, according to a market source.

Under the revised structure, the incremental first-lien term loan B (B1/B) due December 2018 was flexed to Libor plus 500 basis points from Libor plus 475 bps, the source said.

As before, the incremental loan has a 1.25% Libor floor, an original issue discount of 98 and 101 soft call protection for one year.

Proceeds from the new debt will be used to fund a distribution to shareholders.

With this transaction, the company is asking to amend its existing credit facility to allow for the new debt and use of proceeds as well as to extend maturities on its $60 million revolver, $635 million first-lien term loan B and a $355 million second-lien term loan.

The revolver, which would be pushed out by three years to June 2016, is now priced at Libor plus 475 bps, up from Libor plus 450 bps. Non-extended pricing is Libor plus 200 bps.

The existing term loan B, which would be extended by three years to June 2017, was flexed to Libor plus 475 bps from Libor plus 450 bps and 101 soft call protection for one year was added, the source continued. Non-extended pricing is Libor plus 225 bps based on pro forma total leverage of 5.6 times.

The second-lien term loan, which would be extended by three years to June 2018, is priced at Libor plus 1,000 bps at leverage of greater than 5.0 times and Libor plus 900 bps at leverage of 5.0 times, versus prior talk of Libor plus 825 bps. The PIK toggle option was removed and non-extended pricing is Libor plus 575 bps.

Additionally, hard call protection on the second-lien term loan was changed to 103 in year one, 102 in year two and 101 in year three, from 102 in year one and 101 in year three, the source remarked.

Also as part of the changes, the restricted payments basket was revised so that the company can pay dividends if the total leverage ratio is less than 4.0 times, whereas there were previously no restrictions.

The excess cash flow sweep was changed to 50% with a step-down to 0% at 4½ times leverage. It was previously set at 50% with a step-down to 25% at 5½ times leverage and to 0% at 4½ times leverage.

Furthermore, the existing first-lien term loan B saw the addition of a 25 bps most favored nation provision against future amendments and extensions, and the incremental term loan B got a 25 bps most favored nation provision as well.

Consents and commitments were due at noon ET on Wednesday.

First-lien lenders were offered 25 bps for amendment consents and 25 bps for extensions, and second-lien lenders were offered 25 bps for consents and 75 bps for extensions, the source said. Originally, the company was only offering extending first- and second-lien lenders a 50 bps fee.

J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC, Jefferies & Co. and Deutsche Bank Securities Inc. are the bookrunners on the deal.

Closing is expected on Dec. 28.

Kronos is a Chelmsford, Mass.-based provider of workforce management software.

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