MKS Instruments sets €500 million term loan at 99.75 OID

By Sara Rosenberg

New York, Oct. 22 – MKS Instruments Inc. firmed the original issue discount on its €500 million seven-year covenant-lite term loan at 99.75, the tight end of most recent talk of 99.5 to 99.75, and tighter than revised talk in the range of 99 to 99.5 and initial talk of 99, according to a market source.

Pricing on the euro term loan is Euribor plus 275 basis points with a 0% floor.

The company is also getting a $4.7 billion seven-year covenant-lite term loan priced at Libor plus 225 bps with a 0.5% Libor floor and an original issue discount of 99.75.

Both term loans (Ba1/BB-/BBB-) have 101 soft call protection for six months.

Earlier in syndication, the U.S. term loan was upsized from $4.28 billion, pricing was set at the low end of revised talk of Libor plus 225 bps to 250 bps and down from initial talk of Libor plus 250 bps, and the discount was changed from revised talk of 99.5 and initial talk of 99. Also, the euro term loan was downsized from $1 billion equivalent.

JPMorgan Chase Bank, Barclays, BofA Securities Inc., HSBC Securities, Citigroup Global Markets Inc. and Mizuho are the leads on the deal.

The company is also planning on getting a $500 million five-year asset-based revolving credit facility.

Proceeds will be used to help fund the acquisition of Atotech Ltd. for $16.20 in cash and 0.0552 of a share of MKS common stock for each Atotech common share, and to refinance existing credit facilities. The equity value of the transaction is $5.1 billion, and the enterprise value is about $6.5 billion.

Other funds for the acquisition will come from cash on hand.

At close, pro forma gross leverage is expected to be around 4.4x and net leverage is expected to be around 3.7x, based on LTM second-quarter 2021 adjusted EBITDA of $1.208 billion.

Closing is expected in the fourth quarter, subject to Atotech shareholder approval, approval of the Royal Court of Jersey, regulatory approvals, and other customary conditions.

MKS is an Andover, Mass.-based provider of technologies that enable advanced processes and improve productivity. Atotech is a Berlin-based specialty chemicals technology company.

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