Itron plans $1.15 billion five-year facilities for Silver Spring buy

By Sara Rosenberg

New York, Dec. 5 – Itron Inc. plans on getting $1.15 billion of five-year senior secured credit facilities to help fund its acquisition of Silver Spring Networks Inc., to refinance existing debt and for general corporate purposes, according to a market source.

Wells Fargo Bank is the administrative agent on the deal.

The facilities consist of a $500 million revolver, under which $125 million is expected to be drawn, and a $650 million term loan A, the source said.

Pricing on the facilities is expected to be based on a total leverage grid with the spread ranging from Libor plus 100 basis points to 225 bps, and there is a 0% Libor floor.

The revolver is expected to have a commitment fee ranging between 17.5 bps to 35 bps based on the average daily unused amount.

Amortization on the term loan A is 2.5% per annum from the quarter ending June 30, 2018 through the quarter ending March 31, 2019, 5% per annum from the quarter ending June 30, 2019 through the quarter ending March 31, 2020, 7.5% per annum from the quarter ending June 30, 2020 through the quarter ending March 31, 2021 and 10% per annum from the quarter ending June 30, 2021 through the quarter ending Dec. 31, 2022, with the balance due upon maturity.

Incremental allowance is $300 million plus an unlimited additional amount subject to pro forma compliance with a secured net leverage ratio of 2.75 times.

Under the agreement, Silver Spring is being bought for $16.25 per share in cash. The transaction is valued at about $830 million, net of $118 million of Silver Spring’s cash.

Other funds for the transaction will come from $300 million in senior notes and cash on hand.

When the acquisition was first announced, the company said that it planned on getting a $400 million seven-year senior secured covenant-light term loan B and issuing $350 million in notes, and that it would amend its existing credit agreement to allow for the acquisition, the new term loan B and the issuance of notes, and to revise certain other terms.

There are no longer plans for a new term loan B, the source added.

As committed, pricing on the term loan B was anticipated to be Libor plus 275 bps with a 0% Libor floor, and the tranche was expected to include 101 soft call protection for six months.

Closing on the acquisition is expected in late 2017 or early 2018, subject to customary conditions, including regulatory approval and the approval of Silver Spring’s stockholders.

Itron is a Liberty Lake, Wash.-based technology and services company. Silver Spring is a San Jose, Calif.-based provider of Internet of Important Things connectivity platforms and solutions to utilities and cities.

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