Owens-Illinois plans $2.25 billion of loans and bonds for acquisition

By Sara Rosenberg

New York, May 13 – Owens-Illinois Inc. has received a commitment for $2.25 billion of debt financing to fund its acquisition of Vitro, SAB de CV’s food and beverage glass container business in an all-cash transaction valued at about $2.15 billion, company officials said in a conference call on Wednesday.

The debt is anticipated to include a mix of term loans and bonds that will be issued just prior to close, officials continued.

Currently, the company expects the blended interest rate on the debt to be about 4%, based on expectations for a roughly 2% rate on the term loans and a roughly 5% rate on the bonds.

Officials added that the actual debt commitment is for term loans and a bridge loan, but the plan is to replace that bridge loan with the bonds.

Deutsche Bank Securities Inc. is the lead bank on the financing.

Total leverage will be 3.9 times and net leverage will be 3.8 times.

The company expects to use the strong free cash flow of the combined business to reduce leverage following the transaction.

Closing is anticipated to occur within 12 months, subject to approval by Vitro’s shareholders and customary regulatory approvals.

Owens-Illinois is a Perrysburg, Ohio-based glass container manufacturer.

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