MKS shifts funds between U.S. and euro term loans, trims spreads

By Sara Rosenberg

New York, April 11 – MKS Instruments Inc. downsized its U.S. seven-year term loan B to $3.6 billion from $3.81 billion and upsized its euro seven-year term loan B to €600 million from €400 million, according to a market source.

Also, pricing on the U.S. term loan was reduced to SOFR+CSA plus 275 basis points from SOFR+CSA plus 300 bps and pricing on the euro term loan was lowered to Euribor plus 300 bps from Euribor plus 325 bps, the source said.

The U.S. term loan still has a 0.5% floor, CSA of 10 bps one-month rate, 15 bps three-month rate and 25 bps six-month rate and a ticking fee starting on day 0 of SOFR+CSA plus the full margin and floor, the euro term loan still has a 0% floor and a ticking fee starting on day 0 of Euribor plus the full margin and floor, and both term loans still have an original issue discount of 98 and 101 soft call protection for one year. The ticking fees are only payable if the deal closes.

The company’s $5.75 billion equivalent of senior secured credit facilities (Ba1) include a $500 million five-year revolver and a $1 billion five-year term loan A as well.

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

Recommitments for the U.S. term loan were scheduled to be due at noon ET on Monday, and recommitments for the euro term loan were scheduled to be due at 10 a.m. ET on Monday, the source added.

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.

As previously reported, the company allocated in October 2021 a $4.7 billion seven-year covenant-lite term loan and €500 million seven-year covenant-lite term loan for the acquisition, but that debt commitment was terminated as a result of an amendment to the acquisition agreement to extend the required closing date of the acquisition to Sept. 30, 2022 from March 31, 2022, allowing additional time for the regulatory approval from China’s State Administration for Market Regulation.

No early termination penalties were incurred by the company in connection with the termination.

The canceled $4.7 billion term loan was priced at Libor plus 225 bps with a 0.5% Libor floor and an original issue discount of 99.75 and the canceled €500 million term loan was priced at Euribor plus 275 bps with a 0% floor and a discount of 99.75. Both term loans included 101 soft call protection for six months.

Under the original financing, the company was also getting a $500 million five-year asset-based revolving credit facility.

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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