Lear increases revolver to $1.25 billion, gets $500 million term loan

By Toni Weeks

San Luis Obispo, Calif., Nov. 14 – Lear Corp. amended and restated its senior secured credit agreement with JPMorgan Chase Bank NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The amendment, among other things, increased the total commitments under the company’s revolving credit facility to $1.25 billion and established a $500 million delayed-draw five-year term loan. It also extended the maturity of the revolver to Nov. 14, 2019 from Jan. 30, 2018.

In addition, the covenants under the agreement were modified to, among other things, provide additional flexibility with respect to certain actions. The company may not permit the consolidated leverage ratio and the consolidated interest coverage, on the last day of any fiscal quarter beginning with the first fiscal quarter end date following the closing date, to exceed 35 times and 2.75 times, respectively, for the four consecutive fiscal quarters of the company ending with such fiscal quarter end date.

Borrowings under the revolver bear interest at Libor plus 100 basis points to 225 bps, and those under the term loan bear interest at 125 bps to 225 bps. There is a facility fee rate of 25 bps to 50 bps and a ticking fee rate of 17.5 bps to 40 bps. In all cases, the actual margin is based on the company’s corporate ratings.

Proceeds of the term loan will be used to fund a portion of the consideration for Lear’s previously announced acquisition of Everett Smith Group, Ltd. According to the filing, Lear initiated the financing transactions to increase its financial flexibility and take advantage of attractive market conditions prior to the acquisition.

J.P. Morgan Securities, LLC, Barclays Bank plc, Citigroup Global Markets Inc., RBC Capital Markets and Bank of America Merrill Lynch were the joint lead arrangers and joint bookrunners for the revolving credit facility. Barclays, JPMorgan, Citigroup Global Markets, RBC Capital Markets and HSBC Bank USA, NA were the joint lead arrangers and joint bookrunners for the delayed-draw term loan facility.

Obligations under the amended and restated credit agreement are guaranteed by some of Lear’s U.S. subsidiaries.

Lear is a Southfield, Mich., automotive components company.

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