Gardner Denver Inc. (GDI), an industrial equipment maker, increased the size and reduced the rate on a portion of financing backing its buyout by KKR & Co., according to a person with knowledge of the matter.
The $1.9 billion term loan, increased from $1.8 billion, will pay interest at 3.25 percentage points more than the London interbank offered rate, down from 3.5 percentage points it was lowered to last week and 4 percentage points to 4.25 percentage points initially proposed, said the person, who asked not to be identified because the terms are private. The lending benchmark will have a 1 percent minimum.
Borrowers are able to lower rates on loans they’re seeking as investor demand for the assets remain at unprecedented levels. Investors poured $1.8 billion into funds that purchase leveraged loans in the U.S. last week, an all-time high, according to Bank of America Corp.
The seven-year debt for Gardner Denver will be offered to lenders at 99.5 cents on the dollar, compared with 99 cents previously proposed, the person said.
UBS AG, Barclays Plc, Citigroup Inc., Deutsche Bank AG, Mizuho Bank Ltd, Royal Bank of Canada, Macquarie Group Ltd. and HSBC Holdings Plc are arranging the financing, which includes a $525 million term piece denominated in euros, also due in seven years, and a $400 million revolving line of credit that expires in five years, the person said.
KKR, the private-equity firm run by Henry Kravis and George Roberts, agreed to buy Gardner Denver for about $3.7 billion. The deal is valued at about $3.9 billion, including the assumption of Gardner Denver’s debt.
Lenders must let the arranging banks know by 12:30 p.m. today in New York whether they will participate in the deal, the person said.
Gardner Denver, based in Wayne, Pennsylvania, makes compressors, pumps and other products. The deal is expected to close this quarter.
Vikram Kini, a vice president in investor relations at Gardner Denver, didn’t immediately respond to an e-mail seeking comment.
Under a revolver, money can be borrowed again once it’s repaid; in a term loan, it can’t.
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