SRS Distribution ups first-lien loan to $147 million, updates pricing

By Sara Rosenberg

New York, June 10 – SRS Distribution Inc. upsized its incremental first-lien covenant-light term loan due Aug. 25, 2022 to $147 million from $127 million and set pricing at Libor plus 425 basis points, the low end of the Libor plus 425 bps to 450 bps talk, according to a market source.

In addition, pricing on the company’s new $130 million second-lien covenant-light term loan due Feb. 25, 2023 was trimmed to Libor plus 875 bps from Libor plus 900 bps.

Also, the original issue discount on the first-lien term loan (on new loans only) was revised to 99.5 from 99, and the discount on the second-lien term loan firmed at 98, the tight end of the 97 to 98 talk, the source said.

Furthermore, the first-lien incremental ratio basket was revised to unlimited up to 4 times net first-lien leverage from unlimited up to 4.25 times net first-lien leverage, and the second-lien incremental ratio basket was changed to unlimited up to 5.25 times net secured leverage from unlimited up to 5.5 times net secured leverage.

Other changes included setting dividends under restricted payments at unlimited amount up to 4 times net total leverage from unlimited amount up to 4.5 times net total leverage, and modifying junior debt prepayments under restricted debt payments to unlimited amounts up to 4.5 times net total leverage from unlimited amounts up to 5 times net total leverage, the source continued.

Lastly, the investments ratio basket was changed to unlimited amounts up to 4.75 times net total leverage from unlimited amounts up to 5 times net total leverage, and costs to achieve synergies under consolidated EBITDA were capped at 20% of consolidated EBITDA from uncapped previously.

Both term loans still have a 1% Libor floor, the first-lien term loan still has 101 soft call protection for one year, and the second-lien term loan still has call protection of 103 in year one, 102 in year two and 101 in year three.

Barclays and UBS Investment Bank are the bookrunners on the now $277 million in term loans, up from $257 million, with Barclays the left lead on the first-lien term loan and UBS left lead on the second-lien term loan.

Commitments are due at 5 p.m. ET on Monday, accelerated from 5 p.m. ET on June 20, the source added.

Proceeds will be used to fund a dividend to existing shareholders.

Berkshire Partners LLC is the sponsor.

SRS Distribution is a McKinney, Texas-based roofing distributor.

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