Ashland $3.65 billion credit facility expected to launch this month

By Sara Rosenberg

New York, June 2 - Ashland Inc.'s proposed $3.65 billion credit facility is anticipated to launch with a bank meeting within the next two weeks or so, according to a market source.

A senior managing agent round is under way and is targeted to wrap up by the end of next week, the source said.

Citigroup Global Markets Inc., Scotia Capital (USA) Inc., Bank of America Merrill Lynch and U.S. Bank are the joint lead arrangers and bookrunners on the deal, with Scotia as the administrative agent.

The facility consists of a $750 million revolver that will be undrawn at close, a $1.2 billion term loan A and a $1.7 billion term loan B.

According to the commitment letter recently filed with the Securities and Exchange Commission, the five-year revolver and five-year term loan A are expected to be priced at Libor plus 225 basis points initially, with the revolver having a 40 bps unused fee. The spread can range from Libor plus 175 bps to 250 bps, and the revolver unused fee can range from 30 bps to 50 bps, based on corporate ratings.

And, the letter said that the seven-year term loan B is expected to be priced at Libor plus 275 bps with a step-down to Libor plus 250 bps at total leverage of 2.5 times and a 1% Libor floor.

The credit agreement has a $250 million accordion feature.

Financial covenants include a maximum total leverage ratio and a minimum fixed-charge coverage ratio.

Proceeds will be used to help fund the acquisition of International Specialty Products Inc., a Wayne, N.J.-based specialty chemical manufacturer of functional ingredients and technologies, for $3.2 billion in cash.

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

At close, the company's estimated gross debt to EBITDA ratio will be around 3.5 times.

For the 12 months ended March 31, International Specialty generated sales of $1.6 billion and EBITDA of around $360 million.

On a pro forma basis giving effect to the transaction, Ashland would have had combined revenue for the 12 months ended March 31 of roughly $7.6 billion.

Closing is expected prior to the end of the September quarter, subject to satisfaction of customary conditions and receipt of U.S. and European Union regulatory approvals.

Ashland is a Covington, Ky.-based provider of specialty chemical products and services.

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