Therm-O-Disc removes first-lien term loan step-downs, tweaks CSA and call protection

By Sara Rosenberg

New York, May 18 – Therm-O-Disc Inc. (Token Buyer Inc.) made some changes to its $355 million seven-year senior secured covenant-lite first-lien term loan B (B2/B-), including eliminating leverage-based and initial public offering-based pricing step-downs, according to a market source.

Also, the company revised the CSA on the first-lien term loan to 10 bps one-month rate, 15 bps three-month rate and 25 bps six-month rate from 0 bps, and extended the 101 soft call protection to one year from six months, the source said.

In addition, the 50 bps MFN is now set for life instead of having an 18-month sunset, and the excess cash flow sweep was changed to 75% with step-downs at 1x and 1.5x inside closing date first-lien net leverage from 50% with step-downs at 0.25x and 0.5x inside closing date first-lien net leverage.

Modifications were made to incremental, EBITDA, asset sale, and restricted payment and investment baskets as well.

Furthermore, the company is now required to hold quarterly lender calls.

Talk on the first-lien term loan is SOFR plus 500 basis points to 525 bps with a 0.5% floor and an original issue discount of 97.5 to 98.

The company’s $520 million of credit facilities also include a $65 million revolver (B2/B-) and a $100 million second-lien term loan (Caa2/CCC+).

Therm-O-Disc leads

Morgan Stanley Senior Funding Inc., RBC Capital Markets and Jefferies LLC are the bookrunner on Therm-O-Disc’s credit facilities. Morgan Stanley is the administrative agent.

Proceeds will be used with cash on hand to fund the buyout of the company by One Rock Capital Partners LLC from Emerson and to pay related fees and expenses.

Closing is expected in the first half of this year, subject to applicable regulatory approvals and customary conditions.

Therm-O-Disc is a Mansfield, Ohio-based designer and manufacturer of safety-critical sensors, thermal cutoffs and sealed connecting components primarily used in heating, ventilation and air conditioning, appliance, water heater, industrial, aerospace & defense, and transportation applications.

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