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SRAM reveals talk on first- and second-lien term loans with launch
By Sara Rosenberg
New York, May 16 - SRAM International Corp. released price talk on its first- and second-lien term loans as the deal was launched with a bank meeting on Monday, according to a market source.
The $575 million seven-year first-lien term loan (Ba2) is being talked at Libor plus 400 basis points with a 1.25% Libor floor and an original issue discount of 991/2, and the $215 million 71/2-year second-lien term loan (B3) is being talked at Libor plus 750 bps with a 1.5% floor and a discount of 98, the source said.
The company's $840 million credit facility also includes a $50 million five-year revolver (Ba2).
J.P. Morgan Securities LLC is the lead bank on the deal.
Proceeds will be used to repay all of the company's existing bank debt and to acquire all of the 3.64 million class A units of SRAM Holdings LLC held by Trilantic and its co-investors.
The company then plans on doing an initial public offering of class A common stock and using proceeds from that offering to repay some debt under the new credit facility.
SRAM's existing credit facility due in 2015 was obtained in April 2010 via lead bank GE Capital Markets has a $25 million revolver and a $290 million term loan. As of Dec. 31, there was $235 million of outstanding borrowings left under the term loan.
Pricing on the existing term loan is Libor plus 350 bps with a step-down to Libor plus 325 bps when corporate ratings are B1/B+. There is a 1.5% Libor floor, and it was sold at an original issue discount of 99 3/8. The revolver pricing, at close, was Libor plus 350 bps with a 1.5% Libor floor and a 50 bps unused fee.
SRAM is a Chicago-based designer, manufacturer and marketer of bicycle components.
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