The Credit Suisse-led deal for Kinetek saw its first- and second-lien term loans flexed down and increased the last week of October after it was oversubscribed, according to a banker. The first-lien term loan "B" was flexed down 25 basis points, while the second-lien term loan was cut 100 basis points. The term loan "B" of the $380 million deal, originally launched Oct. 10, increased by $5 million to $220 million and the second-lien term loan increased by $25 million to $110 million. The revolver did not change.
The deal now comprises a six-year, $50 million revolver; a seven-year, $220 million term loan "B" and a seven-and-a-half-year, $110 million second-lien term loan. Pricing is LIBOR plus 2 3/4% for the revolver, LIBOR plus 2 1/2% on the term loan "B" and LIBOR plus 5 1/2% on the second-lien term loan. Goldman Sachs and Jefferies Finance are joint book runners on the deal.
The credit is being used byThe Resolute Fund to purchase the company for approximately $450 million. Moody's Investors Service originally rated the credit's first lien B1 and second lien Caa1 citing a high debt leverage of 5.3 times and historically weak to negative free cash flow. Standard & Poor's rated the first lien B with a 2 recovery rating and the second lien CCC+ and a 5 recovery rating. The ratings agency placed Kinetek on CreditWatch Sept. 13 pending the maturity of its $270 million senior notes on Nov. 15 and the expiry of its revolver in October. S&P expects to remove it from CreditWatch after the completion of the buyout transaction, which should offer sufficient time to refinance all existing debt.
Deerfield, Ill.-based Kinetek is a designer and manufacturer of motors, components and control systems for products such as vending machines, appliances and elevators.