SPX enters into $1.2 billion credit agreement, SPX Flow $1.35 billion

By Tali Rackner

Norfolk, Va., Sept. 2 – SPX Corp. entered into a $1.2 billion five-year credit agreement on Tuesday, according to an 8-K filing with the Securities and Exchange Commission.

The facility consists of the following:

• A $350 million term loan facility;

• An up to $200 million domestic revolving credit facility, available for loans and letters of credit;

• An up to $150 million equivalent global revolving credit facility, available for loans in euros, sterling and other currencies;

• An up to $300 million equivalent participation multi-currency foreign credit instrument facility, available for performance letters of credit and guarantees; and

• An up to $200 million equivalent bilateral multi-currency foreign credit instrument facility, available for performance letters of credit and guarantees.

SPX said it may also seek additional commitments, without consent from the existing lenders, to add an incremental term loan facility and/or increase the commitments in respect of the domestic revolving credit facility, the global revolving credit facility, the participation foreign credit instrument facility and/or the bilateral foreign credit instrument facility by an amount not to exceed (a) $300 million; plus (b) a greater amount that would not cause its consolidated senior secured leverage ratio to exceed 2.75 times; plus (c) an amount equal to all voluntary prepayments of the term loan facility and voluntary prepayments accompanied by permanent commitment reductions of the revolving credit facilities and foreign credit instrument facilities.

In addition, SPX FLOW, Inc. entered into a $1.35 billion five-year credit agreement that consists of the following:

• A $400 million term loan facility;

• An up to $250 million domestic revolving credit facility, available for loans and letters of credit;

• An up to $200 million equivalent global revolving credit facility, available for loans in euros, sterling and other currencies;

• An up to $250 million equivalent participation multi-currency foreign credit instrument facility, available for performance letters of credit and guarantees; and

• An up to $250 million equivalent bilateral multi-currency foreign credit instrument facility, available for performance letters of credit and guarantees.

SPX FLOW said it may also seek additional commitments, without consent from the existing lenders, to add an incremental term loan facility and/or increase the commitments in respect of the domestic revolving credit facility, the global revolving credit facility, the participation foreign credit instrument facility, and/or the bilateral foreign credit instrument facility by an amount not to exceed (a) $500 million; plus (b) a greater amount that would not cause its consolidated senior secured leverage ratio to exceed 2.75 times; plus (c) an amount equal to all voluntary prepayments of the term loan facility and voluntary prepayments accompanied by permanent commitment reductions of the revolving credit facilities and foreign credit instrument facilities.

Borrowings under both credit agreements will bear interest at Libor plus 125 basis points to 200 bps, depending on the company’s consolidated leverage ratio.

The commitment fees range from 22.5 bps to 35 bps, and the letter of credit fee ranges from 125 bps to 200 bps.

The credit agreement contains certain financial covenants that require SPX and SPX FLOW to maintain a minimum consolidated interest coverage ratio of 3.5 times and a maximum consolidated leverage ratio of 3.25 times (or 3.5 times for the four fiscal quarters after certain permitted acquisitions).

Proceeds from the credit agreements will be used in part to repay debt outstanding under the company’s existing credit agreement dated Dec. 13, 2013.

Bank of America, NA is the administrative agent and Deutsche Bank AG is the foreign trade facility agent on both deals.

For the SPX facilities, Merrill Lynch, Pierce, Fenner & Smith Inc., Deutsche Bank AG, Deutsche Bank Securities Inc., Commerzbank and the Bank of Nova Scotia are joint lead arrangers; Merrill Lynch, Deutsche Bank AG, Deutsche Bank Securities, Commerzbank, Bank of Nova Scotia, Credit Agricole Corporate and Investment Bank, the Bank of Tokyo-Mitsubishi UFJ, Ltd., J.P. Morgan Securities LLC, SunTrust Robinson Humphrey, Inc. and HSBC Securities (USA) Inc., are joint bookrunners.

For the SPX Flow facilities, Merrill Lynch, HSBC Securities, the Bank of Tokyo-Mitsubishi and JPMorgan are joint lead arrangers; and are also joint book runners along with Deutsche Bank AG, Deutsche Bank Securities, Commerzbank, Bank of Nova Scotia, Credit Agricole and SunTrust.

SPX is a Charlotte, N.C.-based provider of flow technology, test and measurement, thermal equipment and services, and industrial products and services.

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