Preliminary details on Masonite credit facility emerge as bank meeting is slated for Jan. 5

By Sara Rosenberg

New York, Dec. 22 - Preliminary details on Masonite International Corp.'s proposed credit facility emerged including timing, approximate size, structure and price talk, a market source said Monday. SunTrust is sole lead on the transaction.

The facility, which is expected to launch via a bank meeting on Jan. 5, is anticipated to be sized at around $200 million consisting of a new term loan A and a new term loan B.

The sizes of the tranches are still to be determined but it is estimated that the term loan A will be sized anywhere between $50 and $100 million and the term loan B will be sized anywhere between $100 and $150 million.

"Seems like they'll probably go $100 million and $100 million to me," the source added.

Price talk on the term loan A is Libor plus 200 basis points, and price talk on the term loan B is Libor plus 225 basis points. Pricing on the A loan will probably be grid based tied to leverage, while the B loan is expected not to contain grid pricing.

"They're only going out to existing lenders," the source said. "I think the timeline is commitments due by Jan. 13 and looking to close by Jan. 16 depending on regulatory approvals."

The company currently has a revolver and term loan C with an interest rate of Libor plus 275 basis points, both of which are expected to remain in place. These tranches will be amended to allow for the $160 million cash acquisition of The Stanley Works' residential entry door business and the additional bank debt, which will be used to fund the acquisition. Pricing on the term loan C is expected to remain as is throughout this process.

On a pro forma basis and immediately after the expected closing date, the company's pro forma debt-to-equity ratio is estimated to be about 0.9-to-1 and its pro forma debt-to-EBITDA ratio is estimated to be about 2.5-to-1 based on 12 months trailing results and not including any cost benefits from the combination.

Masonite is a Mississauga, Ont., building products company.

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