Summit Materials gets $1.3 billion bridge commitment for Argos buy

By Sara Rosenberg

New York, Sept. 7 – Summit Materials Inc. has received a commitment for an up to $1.3 billion senior 364-day bridge loan to fund the cash consideration for its acquisition of Argos North America Corp. from Cementos Argos SA, according to an 8-K filed with the Securities and Exchange Commission on Thursday.

Morgan Stanley Senior Funding Inc. provided the bridge loan commitment.

Permanent financing for the transaction is expected to be jointly arranged by Morgan Stanley and BofA Securities Inc.

The projected interest rate on the permanent debt is around 7%, company officials said in a conference call.

Under the agreement, Argos is being purchased for about $1.2 billion in cash and around 54.7 million shares of Summit stock, valuing Argos at roughly $3.2 billion based on Summit’s closing share price of $36 as of Sept. 6.

Cementos Argos will own about 31% of the combined company on a fully diluted basis upon the closing of the transaction.

Closing is expected in the first half of 2024, subject to customary conditions, including regulatory approvals and approval by Summit Materials shareholders.

Pro forma net leverage is anticipated to be at or below 3x combined EBITDA, before synergies. The company will continue to uphold its long-term commitment to maintaining leverage below 3x net debt to EBITDA with significant free cash flow generation driving deleveraging.

Summit Materials is a Denver-based supplier of aggregates, cement, ready-mix concrete and asphalt. Argos is a cement producer.

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