Protection One outlines expected pricing on $415 million facility

By Sara Rosenberg

New York, May 3 - Protection One Inc. came out with details on the anticipated pricing of its proposed $415 million senior secured credit facility, according to an SC TO-T filed with the Securities and Exchange Commission on Monday.

Both the $390 million six-year term loan and the $25 million five-year revolver are expected to be priced at Libor plus 400 basis points with a 1.75% Libor floor if the corporate family rating is B2/B or better, and Libor plus 475 bps with a 2% Libor floor if the rating is lower.

The original issue discount on the term loan is expected at 99 at B2/B ratings and at 98½ at lower ratings, and the upfront fee on the revolver is expected at 98½ at B2/B ratings, and at 98 at lower ratings.

The revolver has a 75 bps commitment fee.

Amortization on the term loan is 1% per year with the balance due at maturity.

There is an $80 million accordion feature.

Financial covenants include a maximum total leverage ratio, a minimum interest coverage ratio and a maximum amount of capital expenditures.

JPMorgan and Barclays are the lead arrangers and bookrunners on the deal, with JPMorgan the administrative agent.

Proceeds will be used to help fund the buyout of the company by GTCR.

Under the agreement, GTCR will tender for all of the outstanding common stock of Protection One for $15.50 per share in cash, followed by a merger to acquire all remaining outstanding shares at that same price.

The total purchase price, including the refinancing of Protection One's debt, is roughly $828 million.

Other funding will come from $340 million in equity and $150 million of senior subordinated notes that TCW/Crescent Mezzanine has committed to purchase.

The notes are priced at 12.5% in cash plus 1% PIK.

Closing is expected in the second quarter, subject to minimum levels of participation in the tender offer and regulatory approvals.

Protection One is a Lawrence, Kan.-based provider of electronic security services to the residential, commercial and wholesale markets.

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