Post ups term loan to $885 million, flexes to Libor plus 300 bps

By Sara Rosenberg

New York, May 21 - Post Holdings Inc. upsized its seven-year senior secured term loan to $885 million from a revised amount of $735 million and an initial size of $635 million, according to a market source.

In addition, pricing on the term loan was reduced to Libor plus 300 basis points from Libor plus 325 bps and the Libor floor was cut to 0.75% from 1%, the source said.

The term loan still has an original issue discount of 99½ and 101 soft call protection for six months.

Financial covenants include a maximum senior secured leverage ratio and a maximum consolidated interest coverage ratio.

Recommitments are due at noon ET on Thursday.

Barclays, Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC, Goldman Sachs Bank USA, BMO Capital Markets and Nomura are the bookrunners on the deal.

Proceeds will be used to help fund the acquisition of Michael Foods from GS Capital Partners, Thomas H. Lee Partners and other owners for $2.45 billion on a cash-free, debt-free basis, subject to working capital and other adjustments. In addition, Post will make a payment of $50 million on the first anniversary of the closing date.

Other funds for the transaction will come from a $630 million senior notes offering, a $200 million equity notes offering, a $211.3 million common stock offering and $787.4 million in cash on hand.

The equity/stock transaction was reduced from $500 million, which is why the first upsizing took place to the term loan, and the funds from the newest term loan upsizing will be used to pre-fund the acquisition of PowerBar and for general corporate purposes, the source continued.

Senior secured leverage is 1.5 times, and net total leverage is 6.4 times.

Closing is expected this quarter, subject to conditions, including the expiration of waiting periods required under antitrust laws.

Post is a St. Louis-based consumer packaged goods holding company. Michael Foods is a Minnetonka, Minn.-based producer and distributor of food products to the foodservice, retail and food-ingredient markets.

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