Accellent restructures $1.13 billion credit facility, ratchets spread and price talk tighter

By Paul A. Harris

Portland, Ore., Feb. 20 - Accellent Inc. restructured its $1.13 billion credit facility and cut spread- and price talk on both term loan trances, a market source said on Thursday.

The seven-year first-lien term loan (B2/B) is upsized to $835 million from $795 million. The Libor spread was set at 350 basis points, the tight end of earlier talk of 350 to 375 bps. A 50-cent discount was eliminated, and the deal is set to price at par.

The eight-year second-lien term loan (Caa2/CCC+) was downsized to $220 million from $260 million. The Libor spread was cut to 650 bps, from the 725 to 750 bps spread talked earlier. The OID was trimmed to 993/4, down 75 cents from the previous 99 price talk.

Commitments were due on Thursday, moved up from the previous Feb. 25 deadline.

Calls structures were unchanged: the first-lien term loan is 101 soft call protection for six months, and the second-lien term loan has call protection of 102 in year one and 101 in year two.

Amortization on the first-lien term loan remains unchanged at 1% per annum.

The facility also provides for a $75 million five-year revolver.

UBS Securities LLC, Goldman Sachs Bank USA and KKR Capital Markets LLC are the bookrunners on the financing, with UBS the left lead on the first-lien debt and Goldman Sachs the left lead on the second-lien debt.

Proceeds will be used to fund the acquisition of Lake Region Medical, to refinance an existing credit facility and to repay all of Accellent's senior notes and senior subordinated notes.

Under the agreement, Lake Region, an original development manufacturer of minimally invasive devices and delivery systems to the cardiology and endovascular markets, is being bought for $315 million, plus rollover stockholders will contribute $75 million of their stock for shares of the merged company.

The merged business will be called Lake Region Medical, and the company will continue to use the Accellent brand in marketing the advanced surgical business.

Closing is expected this quarter, subject to regulatory approvals and other customary conditions.

Accellent is a Wilmington, Mass.-based provider of fully integrated outsourced manufacturing and engineering services to the medical device industry.

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