MTS Systems adds banks to credit facility, bridge loan commitments

By Sara Rosenberg

New York, May 11 – MTS Systems Corp. amended and restated the commitment letter for its $490 million credit facility and $250 million senior unsecured bridge loan to add Wells Fargo Securities LLC as a joint lead arranger and joint bookrunner, joining left lead J.P. Morgan Securities LLC, according to an 8-K filed with the Securities and Exchange Commission on Wednesday.

Also, Wells Fargo was named as syndication agent, and U.S. Bank and HSBC Bank were granted co-documentation agent titles. JPMorgan is the administrative agent on the debt.

As previously reported, the credit facility consists of a $100 million five-year revolver and a $390 million seven-year covenant-light term loan B.

Initial pricing on the revolver is anticipated to be Libor plus 400 basis points with a 50 bps commitment fee. The spread can range from Libor plus 250 bps to 400 bps, and the commitment fee can range from 25 bps to 50 bps, based on total leverage.

Pricing on the term loan B is expected at Libor plus 475 bps with a 1% Libor floor.

The term loan B has 101 soft call protection for one year.

Amortization on the term loan B is 1% per annum.

The senior unsecured bridge loan is priced at Libor plus 850 bps with a 1% Libor floor. The spread will increase by 50 bps every 90 days until it hits a specified cap.

The company plans to issue $250 million in senior notes in place of the bridge loan.

Proceeds will be used to fund the $580 million acquisition of PCB Group Inc.

Closing is expected in MTS’ fiscal fourth quarter that ends Oct. 1, subject to regulatory approvals and other customary conditions.

On a combined basis, at the effective date of the merger, the company expects to have pro forma debt leverage of 3.5 to 4 times.

MTS is an Eden Prairie, Minn.-based supplier of high-performance test systems and position sensors. PCB is a Depew, N.Y.-based designer, manufacturer and distributor of sensor technologies.

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