International Paper gets $1.2 billion loan to acquire Temple-Inland

By Marisa Wong

Madison, Wis., Feb. 16 - International Paper Co. entered into a $1.2 billion term loan credit agreement on Monday, according to an 8-K filed Thursday with the Securities and Exchange Commission.

The term loan matures on Feb. 13, 2017.

Interest will equal Libor plus 112.5 basis points to 212.5 bps, depending on the company's credit ratings.

The credit agreement contains customary affirmative and negative covenants as well as customary events of default. The financial covenants in the agreement are identical to the ones in International Paper's $1.5 billion five-year credit agreement dated Aug. 26, 2011. International Paper is required to maintain a consolidated net worth of at least $9 billion and a ratio of total debt to total capital that does not exceed 0.6 to 1.0.

UBS AG, Stamford Branch is the administrative agent. UBS Securities LLC, BNP Paribas Securities Corp., CoBank, ACB, Deutsche Bank Securities Inc., HSBC Securities (USA) Inc. and RBS Securities Inc. are the joint lead arrangers. BNP Paribas is also the syndication agent. Deutsche Bank Securities, HSBC Securities and Royal Bank of Scotland plc are co-documentation agents.

The company will use borrowings to purchase the equity of Temple-Inland Inc. Temple-Inland became a wholly owned subsidiary of International Paper as a result of a merger completed on Monday. Borrowings will also be used to repay some of Temple-Inland's debt.

In addition, International Paper borrowed about $200 million under a new credit facility with Sumitomo Mitsui Banking Corp. as administrative agent and initial lender to fund the acquisition.

International Paper is based in Memphis and produces uncoated papers and packaging products.

Austin, Texas-based Temple-Inland is a manufacturing company focused on corrugated packaging and building products.

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