SPX Flow reworks loan size and terms, frees to trade atop OID

By Sara Rosenberg

New York, March 18 – SPX Flow Inc. upsized its first-lien term loan, revised the original issue discount, added CSA, removed pricing step-downs, extended the call protection and reworked a number of documentation items.

Specifically, the company raised its seven-year covenant-lite first-lien term loan B to $1.61 billion from $1.54 billion, changed the original issue discount to 95.5 from talk in the range of 98 to 98.5, added 10 basis points of CSA, removed the two 25 bps pricing step-downs at 0.5x and 1x inside closing date first-lien net leverage and the 25 bps step-down upon an initial public offering, and extended the 101 soft call protection to one year from six months, a market source remarked.

Pricing on the term loan remained at SOFR plus 450 bps with a 0.5% floor.

Regarding documentation, MFN was adjusted to 50 bps for life, based on effective yield, and in excess of greater of $325 million and 100% of consolidated EBITDA, from 100 bps, based on interest rate margin, with an 18-month sunset and in excess of greater of $650 million and 200% of consolidated EBITDA, the source continued.

The general restricted payment basket was revised to the greater of $115 million and 35% of consolidated EBITDA from the greater of $245 million and 75% of consolidated EBITDA, and the re-allocation of unused capacity under general investments basket and general RDP basket was removed.

Also, ratio-based restricted payment was changed to unlimited subject to 5.25x total net leverage from unlimited subject to 6.5x total net leverage, and the “no worse” prong was eliminated.

SPX incremental changes

SPX revised incremental debt under its term loan to the sum of greater of $245 million and 75% of consolidated EBITDA plus unlimited subject to 4.25x first-lien net leverage, 4.75x senior net leverage, 6.5x total net leverage or 2x interest coverage ratio, and the inside maturity was changed to the greater of $165 million and 50% of consolidated EBITDA from the greater of $650 million and 200% of consolidated EBITDA.

Other revisions under incremental included modifying the general debt basket to the greater of $165 million and 50% of consolidated EBITDA from the greater of $325 million and 100% of consolidated EBITDA, changing the general liens basket was to the greater of $165 million and 50% of consolidated EBITDA from the greater of $325 million and 100% of consolidated EBITDA, removing the “no worse” prongs and the ability to reallocate general debt and general restricted payment baskets, adding a greater of $165 million and 50% non-guarantor cap, and including maturity limitations for ratio debt.

Further document changes included removing asset sale step-downs and the carry forward provision, adding quarterly lender calls and management discussion and analysis with financial statements, and adding Serta, J Crew and Chewy blockers.

And, EBITDA was adjusted to remove “revenue enhancements”, reduce look forward to 24 months, add a 25% cap on cost savings EBITDA addback and add a 25% cap on run-rate benefit for new contracts EBITDA addback.

SPX hits secondary

Recommitments for SPX’s term loan were due at 2:45 p.m. ET on Friday and the debt broke for trading late in the day, with levels quoted at 95¾ bid, 96¾ offered, another source added.

The company’s now $1.81 billion of senior secured credit facilities (B2/B-), up from $1.74 billion, also provide for a $200 million five-year revolver.

Citigroup Global Markets Inc., BofA Securities Inc., RBC Capital Markets LLC, Truist Securities Inc., BNP Paribas Securities Corp., Deutsche Bank Securities Inc. and UBS Investment Bank are leading the deal that will be used with $500 million of senior notes, downsized from $570 million with the term loan upsizing, and $1.878 billion of equity to fund the buyout of the company by Lone Star Funds for $86.50 per share, to refinance some existing debt and to pay related fees and expenses. The transaction is valued at $3.8 billion, including the assumption of debt.

Closing is expected in the first week of April, subject to regulatory approvals, SPX shareholder approval and other customary conditions.

SPX is a Charlotte, N.C.-based provider of process solutions for the nutrition, health and industrial markets.

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