W.R. Grace emerges after almost 13 years in bankruptcy; plan effective

By Caroline Salls

Pittsburgh, Feb. 3 - W. R. Grace & Co.'s joint plan of reorganization took effect on Monday, marking the company's emergence from a Chapter 11 case filed in April 2001, according to a company news release.

The U.S. Bankruptcy Court for the District of Delaware recommended confirmation of the plan in January 2011 and the U.S. District Court for the District of Delaware confirmed it a year later.

As previously reported, the joint plan establishes two independent trusts to compensate asbestos personal injury claimants and property owners.

Grace said the trusts will be funded with more than $4 billion from a variety of sources including cash, warrants to purchase common stock, deferred payment obligations, insurance proceeds and payments from former affiliates.

All allowed claims of non-asbestos creditors will be paid in full, holders of equity interests in the parent company will retain their interests, and equity interests in debtors other than the parent company will remain unaltered by the plan.

Exit financing

Last week, W.R. Grace received court approval to enter into a commitment for up to $1.55 billion of exit financing.

The company said in the motion that obtaining a $700 million senior secured term loan facility, a $200 million euro-equivalent senior secured term loan facility, a $250 million senior secured delayed-draw term loan facility, an up to $250 million senior secured revolving credit facility and an up to $150 million senior secured multi-currency revolver would allow it to emerge from bankruptcy and give it the liquidity needed to support its operations immediately following emergence.

The commitment terms were filed under seal.

As previously reported, W.R. Grace's U.S. term loan debt was quoted by one trader in January at 100¼ bid, 101 offered and by a second trader at 100 5/8 bid, 101 1/8 offered.

Pricing on the U.S. term loan, split between a $700 million funded tranche and a $250 million delayed-draw tranche, is Libor plus 225 bps with a 0.75% Libor floor, and it was sold at a discount of 993/4. There is a 100 bps ticking fee on the delayed-draw loan.

The company is also getting a $200 million euro equivalent seven-year term loan priced at Euribor plus 250 bps with a 0.75% floor and sold at 993/4.

During syndication, pricing on the U.S. term loans was lowered from Libor plus 250 bps, pricing on the euro term loan was cut from Euribor plus 275 bps, the offer price on all term tranches was tightened from 991/2, and all of the term loans saw the addition of a 25 bps step-down in pricing that can occur in December if leverage requisites are met.

In addition to the term loans, W.R. Grace's $1.55 billion credit facility (Ba2/BBB-) includes a $400 million five-year revolver.

Goldman Sachs Bank USA, Deutsche Bank Securities Inc., Bank of America Merrill Lynch and HSBC Securities (USA) Inc. are leading the deal.

W.R. Grace, a Columbia, Md.-based specialty chemicals company, filed for bankruptcy on April 2, 2001. Its Chapter 11 case number is 01-01139.

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