Beacon eyes $2.27 billion loans, $1.3 billion notes for Allied buy

By Sara Rosenberg

New York, Aug. 24 – Beacon Roofing Supply Inc. has received a commitment for $2.27 billion of senior secured credit facilities and plans on issuing $1.3 billion in senior unsecured notes to help fund its acquisition of Allied Building Products Corp. and refinance an existing $440 million term loan B, according to an 8-K filed with the Securities and Exchange Commission on Thursday.

The credit facilities consist of a $970 million seven-year covenant-light term loan B and a $1.3 billion asset-based revolver, under which $380 million will be drawn for the transaction.

As committed, pricing on the term loan B is Libor plus 275 basis points with a 0% Libor floor and an original issue discount of 99.5.

The term loan B is expected to include 101 soft call protection for six months and amortization of 1% per annum.

Pricing on the revolver is outlined as ranging from Libor plus 125 bps to 175 bps based on average excess availability. Initial pricing is expected at Libor plus 150 bps.

Backing the notes is a commitment for a $1.3 billion senior unsecured one-year bridge loan.

Bridge loan pricing is Libor plus 475 bps with a 0% Libor floor. The spread will increase by 50 bps every three months until it hits a specified cap.

Citigroup Global Markets Inc. and Wells Fargo Securities LLC are the joint lead arrangers and bookrunners on the term loan B, the revolver and the bridge loan, with Citi the left lead and administrative agent on the term loan B, and Wells Fargo the left lead and administrative agent on the revolver and bridge loan.

Other funds for the transaction will come from a commitment from Clayton, Dubilier & Rice to provide $500 million in perpetual convertible preferred equity, which can be reduced to a minimum of $400 million through capital market transactions prior to close.

Closing on the $2,625,000,000 acquisition is targeted for Jan. 2, subject to regulatory approvals and customary conditions.

Beacon Roofing is a Herndon, Va.-based distributor of residential and commercial roofing materials and complementary building products. Allied Building is an East Rutherford, N.J.-based distributor of exterior and interior building products.

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