Orbotech launches $300 million term loan B at Libor plus 375 bps

By Sara Rosenberg

New York, July 15 – Orbotech Ltd. launched on Tuesday its $300 million six-year covenant-light term loan B with price talk of Libor plus 375 basis points with a 1% Libor floor and an original issue discount in the 99½ area, according to a 6-K filed with the Securities and Exchange Commission.

The term loan has 101 soft call protection for six months and amortization of 1% per annum, the filing said.

There is an incremental allowance of $100 million and an amount that does not exceed 1.75 times senior secured leverage.

Mandatory prepayments are 100% of net cash proceeds from non-ordinary course sales/dispositions subject to exceptions and reinvestment rights, 100% of net cash proceeds from issuances or incurrences of debt other than permitted debt, 100% of net cash proceeds from the issuance of any equity securities or hybrid equity securities for one year from closing, and 50% excess cash flow with step-downs to 25% at 1.25 times leverage and 0% at 0.75 times leverage.

J.P. Morgan Securities LLC is the lead bank on the deal.

Proceeds will be used to help fund the roughly $370 million acquisition of SPTS Technologies Group Ltd., a U.K.-based manufacturer of etch, deposition and thermal processing equipment for the microelectronics industry, from Bridgepoint and others.

Other funds for the transaction will come from cash on hand.

Closing is expected in the third quarter, subject to certain conditions.

After giving effect to the term loan B borrowing, total leverage will be around 2.9 times and net total leverage will be around 1.7 times, based on trailing 12-month combined business adjusted EBITDA of $102 million as of March 31.

Orbotech is a Yavne, Israel-based provider of yield-enhancing and production solutions, primarily for manufacturers of printed circuit boards, flat panel displays and other electronic components.

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