Sherwin-Williams fills in terms of 364-day bridge loan, five-year loan

By Susanna Moon

Chicago, April 15 – Sherwin-Williams Co. outlined the $9.3 billion of loans that will be used for its acquisition of Valspar Corp. in an 8-K filing with the Securities and Exchange Commission.

The company obtained a $7.3 billion 364-day bridge loan at Libor plus 100 basis points to 250 bps, based on the company’s ratings. The commitment fee is 20 bps.

Citigroup Global Markets Inc. is the lead arranger and bookrunner for the bridge loan, and Citibank, NA is the administrative agent.

Sherwin-Williams also received a $2 billion five-year term loan at Libor plus 100 bps to 175 bps on Wednesday with Citibank, NA as administrative agent. Wells Fargo Bank, NA, Morgan Stanley Senior Funding, Inc. and PNC Bank, NA as co-syndication agents.

The bridge agreement requires a consolidated leverage ratio of total debt to EBITDA of no more than 5.25 times after the Valspar acquisition.

The term loan agreement requires Sherwin-Williams to repay each quarter

• Until the first anniversary, nothing;

• From the first anniversary until the second anniversary, 5% of the aggregate principal amount outstanding at closing;

• From the second anniversary until the fourth anniversary, 6.25% of the aggregate principal amount outstanding at closing; and

• After the fourth anniversary, 7.5% of the aggregate principal amount outstanding.

Revolver amendment, background

Sherwin-Williams also amended its revolving credit agreement with Bank of America, NA as domestic administrative agent and Bank of America, NA as Canadian administrative agent to adjust the permitted leverage ratio for the acquisition.

As reported March 21, Sherwin-Williams plans to use a combination of new debt, cash on hand and liquidity available under existing facilities to fund the transaction that has an enterprise value of $11.3 million and includes the assumption of $2 billion of Valspar debt.

Under the definitive merger agreement, Sherwin-Williams will acquire Valspar for $113 per share in an all-cash transaction.

The deal is expected to close in the first quarter of 2017.

Sherwin-Williams is a Cleveland-based developer, manufacturer and distributor of paints and related products.

Valspar is a coating and paint manufacturer based in Minneapolis.

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