Canam Steel ups spread on $310 million term B to Libor plus 550 bps

By Sara Rosenberg

New York, June 28 – Canam Steel Corp. (Canaveral Holdings B Inc.) increased pricing on its $310 million seven-year covenant-light first-lien term loan B (B3/B) to Libor plus 550 basis points from Libor plus 525 bps, according to a market source.

Additionally, the original issue discount on the term loan B widened to 97 from 98.5 and the call protection was changed to a hard call of 102 in year one and 101 in year two from a 101 soft call for six months, the source said.

Furthermore, the excess cash flow sweep was revised to 75% with step-downs from 50%, the incremental basket was reduced to $65 million and the grower was removed, and under EBITDA add backs the run-rate cost savings were capped at 20% of consolidated EBITDA from uncapped previously.

As before, the term loan has a 1% Libor floor.

Morgan Stanley Senior Funding Inc. and BMO Capital Markets Corp. are the leads on the deal.

Recommitments were scheduled to be due at 5 p.m. ET on Wednesday, the source added.

Proceeds will be used to fund the acquisition of Canam by American Industrial Partners, members of the Dutil family, Caisse de depot et placement du Quebec and Fonds de solidarite FTQ for a cash consideration of $12.30 per share.

Closing is expected near the end of this month.

Canam is a Quebec-based fabricator of steel components.

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