GIP II Blue sets $750 million term loan B at Libor plus 450 bps

By Sara Rosenberg

New York, Sept. 22 – GIP II Blue Holding LP (HESM Holdco) firmed pricing on its $750 million seven-year senior secured term loan B (B1/BB-) at Libor plus 450 basis points, the low end of the Libor plus 450 bps to 475 bps talk, according to a market source.

Additionally, a leverage-based margin step-down was removed from the term loan, and the original issue discount finalized at 98.5, the wide end of the 98.5 to 99 talk, the source said.

Also, the step-down to 50% for mandatory prepayments from asset sales will require 3.5x total net leverage at the borrower and 4x total net leverage at HESM Opco, revised from only the 3.5x test at the borrower, and the total net leverage test in the permitted change of control definition was changed to 4x at the borrower from 5x.

The term loan still has a 1% Libor floor, 101 hard call protection for one year, amortization of 1% per annum, a 1.05x debt service coverage ratio and a 50% excess cash flow sweep with step-downs that increases to 75% in 2025.

Morgan Stanley Senior Funding Inc., Barclays, MUFG, Bank of Nova Scotia and SMBC are the joint lead arrangers and bookrunners on the deal.

Proceeds will be used to pay a special cash distribution to the holders of the borrower’s equity.

Closing is expected during the week of Sept. 27.

GIP directly and indirectly owns about 45% of Hess Midstream Operations LP (HESM Opco), a midstream infrastructure company. Hess Infrastructure Partners owns about 45% of HESM Opco and public shareholders own the remaining roughly 10%.

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