UKG, Protective Industrial term loans free to trade; Copeland final sizes expected soon

By Sara Rosenberg

New York, May 25 – UKG Inc. finalized the spread on its incremental first-lien term loan at the low end of guidance, and Protective Industrial Products Inc. (PIP) modified the original issue discount on its incremental first-lien term loan and extended the call protection, and then both of these deals broke for trading on Thursday.

In more happenings, Copeland is expected to finalize sizes of its term loan A and term loan B during the week of May 29 in connection with the completion of its buyout by Blackstone.

UKG updated, trades

UKG set pricing on its non-fungible $400 million incremental covenant-lite first-lien term loan (B1/B-) due May 2026 at SOFR plus 450 basis points, the low end of the SOFR plus 450 bps to 475 bps talk, a market source said.

The incremental term loan still has 10 bps CSA, a 0.5% floor, an original issue discount of 97.5 and 101 soft call protection for six months.

On Thursday afternoon, the incremental term loan broke for trading, with levels quoted at 97 5/8 bid, 98 1/8 offered, a trader added.

Nomura, BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Macquarie Capital (USA) Inc., Truist, Wells Fargo Securities LLC and others to be announced are leading the deal that will be used to pay down a revolver draw and further bolster liquidity in anticipation of a potential strategic acquisition that is under a letter of intent.

Closing is expected during the week of May 29.

UKG is a provider of human capital management solutions based in Weston, Fla., and Lowell, Mass.

PIP revised, breaks

Protective Industrial Products adjusted the original issue discount on its non-fungible $150 million incremental first-lien term loan (B2/B-) to 96 from 97 and extended the 101 soft call protection to one year from six months, according to a market source.

As before, the incremental term loan is priced at SOFR plus 500 bps with a 0.75% floor.

The incremental term loan freed to trade during the session, with levels quoted at 96 1/8 bid, 96 5/8 offered, the source added.

Antares Capital is the left lead on the deal that will be used for acquisitions.

Protective Industrial, a portfolio company of Odyssey Investment Partners, is a Latham, N.Y.-based provider of essential, consumable and high-performance hand and arm protection as well as other personal protective equipment and workwear.

Copeland firming soon

Copeland is expected to set the sizes of its term loan A and term loan B tranches next week as its buyout is anticipated to close at the end of the month, a market source remarked.

As previously reported, upon allocating on May 4, the seven-year term loan B was sized at $2.725 billion, but has the potential to be reduced ahead of closing by a term loan A of up to $450 million.

The term loan B is priced at SOFR plus 300 bps with a 25 bps step-down at 3.25x first-lien net leverage, a 0% floor and an original issue discount of 99, and has 101 soft call protection for six months.

During syndication, the term loan B was downsized from $2.75 billion as the company’s U.S. senior secured notes offering was increased to $2.275 billion from $2.25 billion, and pricing was reduced from SOFR plus 350 bps.

On Thursday, the term loan B was quoted at 99 bid, 99 1/8 offered, a trader added. When the loan broke for trading on May 4, it was quoted at 99 1/8 bid, 99˝ offered.

Copeland lead banks

RBC Capital Markets, Barclays, Wells Fargo Securities LLC, SMBC, Goldman Sachs Bank USA, BNP Paribas Securities Corp., HSBC Securities (USA) Inc., JPMorgan Chase Bank, Mizuho, Truist, BofA Securities Inc., MUFG, Bank of Nova Scotia, TD Securities (USA) LLC, CIBC, Regions, Fifth Third and US Bank are leading Copeland’s bank debt.

Proceeds from the term loan B, and potential term loan A, U.S. notes and €455 million of senior secured notes will be used with equity to fund the acquisition by Blackstone of a majority stake in Emerson Electric Co.’s Climate Technologies business (Copeland) for an aggregate purchase price of $14 billion.

Under the agreement, Emerson will receive upfront, pre-tax cash proceeds of about $9.5 billion and a note of $2.25 billion at close and retain 45% common equity ownership in the new stand-alone joint venture.

Copeland is a manufacturer of mission critical, highly engineered heating, ventilation, air conditioning and refrigeration components.

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