ServiceMaster LBO financing to include $3.35 billion facility, $1.15 billion unsecured senior debt

By Sara Rosenberg

New York, April 16 - The ServiceMaster Co. detailed its leveraged buyout financing package, including plans for a $3.35 billion senior secured credit facility and $1.15 billion of unsecured senior debt, according to a PREM14A filed Monday with the Securities and Exchange Commission.

Citigroup, JPMorgan and Bank of America are the lead banks on the financing. Commitments for the financing have also come from Blue Ridge Investments, Goldman Sachs and Morgan Stanley.

The credit facility consists of a $2.65 billion term loan, a $200 million pre-funded synthetic letter-of-credit facility and a $500 million revolver.

As a backup for the unsecured senior debt, the company has a commitment for a $1.15 billion 12-month unsecured senior interim loan.

Under the buyout agreement, Clayton, Dubilier & Rice, Inc. is buying ServiceMaster for $15.625 in cash per share. The total enterprise value is $5.5 billion, including the assumption of existing ServiceMaster debt.

In connection with the transaction, ServiceMaster's existing credit facility, 6.95% notes due Aug. 15, 2007 and 7 7/8% notes due Aug. 15, 2009 will all be repaid.

The company's 7.10% notes due March 1, 2018, 7.45% notes due Aug. 15, 2027, 7¼% notes due March 1, 2038, and about $450 million in certain capital leases and deferred payment obligations are expected to remain outstanding following the buyout.

Other financing for the deal will come from $1.431 billion in equity.

Completion of the transaction is contingent upon customary closing conditions, including the approval of a majority of ServiceMaster's outstanding shares and regulatory approval.

ServiceMaster is a Downers Grove, Ill., provider of services to residential and commercial customers, including lawn care and landscape maintenance, termite and pest control, home warranties, disaster response and reconstruction, cleaning and disaster restoration, house cleaning, furniture repair and home inspection.

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