Knowlton ups spread on $525 million term loan to Libor plus 425 bps

By Sara Rosenberg

New York, Dec. 11 – Knowlton Development Corp. increased pricing on its $525 million seven-year first-lien term loan (B2/B+) to Libor plus 425 basis points from talk in the range of Libor plus 375 bps to 400 bps, according to a market source.

Additionally, it was outlined that the 101 soft call protection for six months applies to repricings in connection with a dividend recapitalization, asset sale sweep step-downs were removed and the unused general debt basket was restricted from being reallocated to the incremental freebie, the source said.

Furthermore, the MFN sunset was eliminated, the MFN exception amount was reduced to $52.6 million, the MFN maturity exception was extended to 24 months and the MFN excluded amount was eliminated.

Also, the no worse than incurrence prong was limited to debt incurred in connection with an acquisition or similar investment, the inside maturity amount exception was limited to the greater of $26.3 million or 25% of LTM EBITDA, the ratio debt incurred by non-loan parties is now subject to a cap, and the contribution debt basket was reduced to 100% from 200%, the source continued.

Other changes to documentation included making unlimited investments subject to 4.25 times first-lien net leverage, making unlimited restricted payments subject to 4 times first-lien net leverage, capping EBITDA add-backs at 30% with a 24-month look-forward, and requiring annual lender calls.

The term loan still has a 0% Libor floor and an original issue discount of 99.

The company’s $600 million of credit facilities also include a $75 million five-year revolver.

UBS Investment Bank, Guggenheim and Jefferies LLC are the joint lead arrangers on the deal.

Commitments remained due at 5 p.m. ET on Tuesday, the source added.

Allocations are expected later this week.

Proceeds will be used with equity to fund the buyout of the company by Cornell Capital.

Knowlton Development is a Quebec-based manufacturer of health and beauty-care products.

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