SRAM readies launch of $840 million credit facility for Monday

By Sara Rosenberg

New York, May 12 - SRAM International Corp. is scheduled to hold a bank meeting on Monday to launch a proposed $840 million credit facility, according to sources.

J.P. Morgan Securities LLC is the lead bank on the deal.

The facility consists of a $50 million five-year revolver, a $575 million seven-year first-lien term loan and a $215 million 71/2-year second-lien term loan, sources said.

Proceeds will be used to repay all of the company's existing bank debt and acquire all of the 3.64 million class A units of SRAM Holdings LLC held by Trilantic and its co-investors.

The company then plans on doing an initial public offering of class A common stock and using proceeds from that offering to repay some debt under the new credit facility.

SRAM's existing credit facility due in 2015 was obtained in April 2010 via lead bank GE Capital Markets as a $25 million revolver and a $290 million term loan. As of Dec. 31, 2010, there was $235 million in outstanding borrowings left under the term loan.

Pricing on the existing term loan is Libor plus 350 basis points with a step-down to Libor plus 325 bps when corporate ratings are B1/B+. There is a 1.5% Libor floor, and it was sold at an original issue discount of 99 3/8. The revolver pricing, at close, was Libor plus 350 bps with a 1.5% Libor floor and a 50 bps unused fee.

SRAM is a Chicago-based designer, manufacturer and marketer of bicycle components.

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