Tomkins Ltd. is seeking to lower the rate it pays on a $1.4 billion term loan, according to a person with knowledge of the transaction.
The interest paid on the debt due in 2016 will be reduced to 2.75 percentage points more than the London interbank offered rate, said the person, who asked not to be identified because the information is private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1 percent floor.
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, said the person.
Citigroup Inc. is arranging the transaction for the London- based engineering and manufacturing company controlled by Canada Pension Plan Investment Board and Onex Corp., according to the person. Investors have until Jan. 15 to let the bank know whether they will participate in the deal.
The company’s existing term loan pays interest at 3 percentage points more than Libor, with a 1.25 percent floor, and was quoted at 101.125 cents on the dollar today, according to data compiled by Bloomberg.
John Zimmerman, chief financial officer of Tomkins, didn’t immediately respond to an e-mail seeking comment.
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