Dematic SA cut the rate it will pay on a $540 million covenant-lite term loan backing it’s buyout by AEA Investors LP and Ontario Teachers’ Pension Plan, according to a person with knowledge of the transaction.
The seven-year debt will pay interest at 4 percentage points more than the London interbank offered rate, down from 4.75 percentage points, said the person, who asked not to be identified because the information is private. The Libor floor remains unchanged at 1.25 percent.
Dematic is proposing to sell the loan at 99 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.
Lenders are being offered one-year soft-call protection of 101 cents, meaning the company would have to pay 1 cent more than face value to refinance the debt during the first year, the person said.
Credit Suisse Group AG, JPMorgan Chase & Co. and Barclays Plc are arranging the financing for the Luxembourg-based supplier of automated warehouses and handling systems for Amazon.com Inc. and Wal-Mart Stores Inc., according to data compiled by Bloomberg. The debt is expected to be distributed to investors today, the person said.
Deborah Allen, a spokeswoman for Ontario Teachers’ Pension Plan, didn’t immediately respond to an e-mail seeking comment.
Covenant-lite debt doesn’t carry typical lender protection such as financial-maintenance requirements.
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