Rexnord plans term loan B add-on, new bonds for Zurn purchase

By Sara Rosenberg

New York, Oct. 11 - Rexnord Corp. plans to obtain about $660 million of new debt comprised of a term loan B add-on and new bonds, issued under the existing indenture, to help fund the acquisition of Zurn.

Currently, the company anticipates accessing the $200 million accordion feature under its existing term loan B credit agreement and raising the remaining $460 million of bonds, however, that breakdown has not yet been finalized, George C. Moore, executive vice president and chief financial officer, told Prospect News.

Rexnord has two bond tranches currently outstanding - $485 million of 9½% senior notes due Aug. 1, 2014 and $300 million 11¾% senior subordinated notes due Aug. 1, 2016. The company has not yet determined under which indenture the new bonds would be issued, Moore said.

Moore also added that at this point, the company is not looking to amend its term loan B accordion feature to increase it for this transaction.

Rexnord is purchasing Zurn, the plumbing products business of Jacuzzi Brands, Inc., for a cash purchase price of about $950 million.

In addition to the new debt financing, about $290 million of equity will be used for the transaction.

This transaction is expected to be leveraged neutral for the company.

Closing is expected in the first quarter 2007, subject to receipt of financing, the completion of Apollo Management LP's proposed acquisition of Jacuzzi Brands and approval by Jacuzzi Brands' stockholders.

RBS Global, Inc., the parent company of Rexnord and a portfolio company of Apollo Management, is a Milwaukee-based, manufacturer of highly engineered power transmission, aerospace and other precision motion technology products.

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