Sealed Air adds BofA, BNP, RBS as leads on $4.5 billion debt financing

By Sara Rosenberg

New York, June 22 - Sealed Air Corp. added Bank of America Merrill Lynch, BNP Paribas Securities Corp. and RBS Securities Inc. as leads on its $3 billion credit facility and $1.5 billion of senior unsecured notes, according to an 8-K filed with the Securities and Exchange Commission on Wednesday.

The three banks join previously announced left lead bank Citigroup Global Markets Inc.

Specifically, Citigroup, Bank of America, BNP and RBS are lead arrangers and bookrunners on the credit facility, Citigroup, Bank of America and RBS are the leads on the U.S. dollar bridge loan backing the notes offering, and Citigroup, Bank of America and BNP are the leads on the euro bridge loan backing the notes.

Citigroup has committed to provide 50% of the debt financing, Bank of America has committed to provide 25%, and BNP and RBS have each committed to provide 12.5%.

The credit facility consists of a $700 million multi-currency five-year revolver, a $750 million five-year term loan A and a $1.55 billion seven-year term loan B.

Pricing on the revolver and term loan A is expected to be Libor plus 250 basis points, with step-downs to be agreed upon. The unused fee on the revolver is 50 bps with a step-down to 37.5 bps based on leverage.

Meanwhile, pricing on the term loan B is expected to be Libor plus 275 bps on the U.S. piece and Euribor plus 300 bps on the euro piece, with the entire tranche having a 1% Libor/Euribor floor.

The term loan A is available in euros. The company, however, can request that the entire amount be made in dollars instead.

Of the total term loan B amount, $1 billion is available in dollars and $550 million is available in euros, but, once again, the company can request that all of the B loan debt be borrowed in dollars.

Amortization on the term loan A is 5% in year one, 10% in years two and three, 25% in year four and 50% in year five, while term loan B amortization is 1% per year.

The credit agreement includes a $500 million accordion feature that can be increased by another $500 million if total net secured leverage is no greater than 2.0 times.

The only financial covenant contained in the facility is a maximum total net leverage ratio.

As for the notes, the company expects that $1 billion will be issued in dollars and $500 million will be issued in euros.

Backing up the notes is a commitment for a $1.5 billion one-year senior unsecured bridge loan, of which $1 billion will be available in dollars and $500 million will be available in euros.

Pricing on the bridge loan is Libor plus 575 bps on the U.S. piece and Euribor plus 600 bps on the euro piece, with the spread on both pieces stepping up by 50 bps after three months and every three months thereafter. There is a 1% Libor floor on the U.S. tranche and a 1.25% Euribor floor on the euro tranche.

Pro forma leverage will be 4.4 times, but with strong free cash flow generation, the company expects to be able to deleverage rapidly.

Proceeds will be used to fund the acquisition of Diversey Holdings Inc. from the Johnson family and Clayton, Dubilier & Rice LLC for $2.1 billion in cash and an aggregate of 31.7 million shares of Sealed Air common stock. The transaction is valued at $4.3 billion.

In connection with the acquisition, $1.4 billion of Diversey net debt will be refinanced.

Closing is expected to take place this year, subject to customary regulatory approvals.

Sealed Air is an Elmwood Park, N.J.-based manufacturer of packaging and performance-based materials and equipment systems that serve food, industrial, medical and consumer applications. Diversey is a Sturtevant, Wis.-based provider of cleaning, sanitization and hygiene products.

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