Diversified Machine Inc., a supplier of chassis and powertrain components, set the interest rate it will pay on a $175 million term loan backing Platinum Equity LLC’s acquisition of the company from Carlyle Group, according to a person with knowledge of the transaction.
The debt will pay 7.75 percentage points more than the London interbank offered rate, said the person, who declined to be identified because the terms are private. Libor, a rate banks charge to lend to each other, will have a 1.5 percent floor.
Bank of Montreal and Mizuho Financial Group are arranging the financing and lenders must submit commitments by Nov. 17, the person said.
The Wixom, Michigan-based company is also seeking a $60 million asset-based revolving line of credit, said the person.
Mark Barnhill, a spokesman for Platinum Equity, didn’t respond to an e-mail seeking comment.
An asset-based financing is secured by the borrower’s inventory and account receivables. In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t.