Watts Water enters into $500 million revolver, $300 million term loan

By Tali Rackner

Norfolk, Va., Feb. 17 – Watts Water Technologies, Inc. entered into a $500 million five-year senior unsecured revolving credit facility and a $300 million five-year term loan facility agreement on Feb. 12, according to an 8-K filing with the Securities and Exchange Commission.

JPMorgan Chase Bank, NA is the administrative agent, swingline lender and letter-of-credit issuer.

The revolver contains a sublimit of up to $100 million in letters of credit. The term loan facility is available to the company in a single draw.

Borrowings under the revolver bear interest at Libor plus 97.5 basis points to 145 bps, based on Watts Water’s consolidated leverage ratio.

Term loan borrowings bear interest at Libor plus 112.5 bps to 175 bps, also based on leverage.

The facility fee ranges from 15 bps to 30 bps.

The term loan facility amortizes as follows: 0% per annum during the first year, 7.5% in the second and third years and 10% in the fourth and fifth years. Payments when due are made ratably each year in quarterly installments.

Watts Water borrowed $300 million under the term loan facility at closing and used about $278 million of the proceeds to prepay all outstanding loans, accrued and unpaid interest and fees under its previous credit agreement dated Feb. 18, 2014. The previous agreement was then terminated.

The company intends to use the remaining $22 million and future borrowings under the revolver to pay off all amounts outstanding under its $225 million of 5.85% senior unsecured notes due April 30, 2016 on their due date.

Future borrowings under the revolver will also be used for acquisitions, working capital and other general corporate purposes.

The credit agreement matures on Feb. 12, 2021, subject to certain extension options.

Bank of America, NA, KeyBank NA and Wells Fargo Bank, NA are co-syndication agents and Citizens Bank, NA is the documentation agent. J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Inc., KeyBank and Wells Fargo Securities, LLC are joint lead arrangers and bookrunners.

Watts Water is a North Andover, Mass.-based plumbing equipment manufacturer.

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