Solenis shifts funds between U.S. and euro first-lien term loans

By Sara Rosenberg

New York, June 15 – Solenis LLC upsized its 5.5-year U.S. covenant-light first-lien term loan to $815 million from $700 million and downsized its 5.5-year euro covenant-light first-lien term loan to €375 million from €475 million, according to a market source.

Also, the original issue discount on the U.S. and euro first-lien term loans firmed at 99, the wide end of revised talk of 99 to 99.5 and wide of initial talk of 99.5, the source said.

Pricing on the U.S. first-lien term loan is Libor plus 400 basis points with a 0% Libor floor and pricing on the euro first-lien term loan is Euribor plus 425 bps with a 0.5% floor.

The first-lien term loans have a 25 bps step-up if the combination with BASF Paper & Water doesn’t close and first-lien leverage is more than 4.75 times and an additional 25 bps step-up if the combination doesn’t close and first-lien leverage is more than 5 times.

The company is also getting a $400 million six-year covenant-light second-lien term loan priced at Libor plus 850 bps with a 0% Libor floor and a discount of 97.

The second-lien term loan has a 25 bps step-up if the combination with BASF Paper & Water doesn’t close and secured leverage is more than 5.75 times and an additional 25 bps step-up if the combination doesn’t close and secured leverage is more than 6 times.

Included in the first-lien term loans is 101 soft call protection for the earlier of one year and the close of the BASF Paper & Water combination, and the second-lien term loan is non-callable, other than with customary make-whole, until the earlier of one year and the combination closing, and if the combination closes within one year, 103 for the remainder of the year, followed by 102 for a year and 101 for a year.

Earlier in syndication, pricing on the U.S. first-lien term loan was increased from Libor plus 350 bps, pricing on the euro first-lien term loan was lifted from Euribor plus 350 bps, pricing on the second-lien term loan widened from Libor plus 750 bps, the discount on the second-lien term loan was changed from 99, and the second pricing step-ups were added to each term loan.

Also, previously, the call protection on the first-lien term loans was extended from six months, the call protection on the second-lien term loan was revised from a hard call of 102 in year one and 101 in year two, the maturity of the first-lien term loans was shortened from seven years, the maturity of the second-lien term loan was shortened from eight years and a number of changes were made to documentation.

Upon closing of the BASF Paper & Water combination, the first-lien term loans maturity will spring to seven years from the refinancing date and the second-lien term loan maturity will spring to eight years from the refinancing date.

The company’s $1.85 billion equivalent of senior secured credit facilities also provide for a $200 million multi-currency revolver (B2/B-).

Citigroup Global Markets Inc., Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Natixis, RBC Capital Markets, Macquarie Capital (USA) Inc. and ING are the joint lead arrangers on the deal, with Citi the left lead on the first-lien debt and Bank of America the left lead on the second-lien debt. Citi is the administrative agent on the revolver and first-lien term loan and Credit Suisse is the agent on the second-lien loan.

Allocations are expected on Monday, the source added.

Proceeds will be used to refinance existing credit facilities in preparation for the combination with BASF’s paper and water chemicals business.

Solenis is a Wilmington, Del.-based producer of specialty chemicals for water intensive industries, including the pulp, paper, oil and gas, chemical processing, mining, biorefining, power and municipal markets.

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