April 26 (Bloomberg) -- Ineos Group Holdings Ltd increased the size of loan to support a refinancing to $3.025 billion, making it the largest covenant-lite financing.
Barclays and JPMorgan Chase & Co. are arranging the debt, which includes a $2 billion portion and a $650 million euro-denominated slice, both due in six years, and a $375 million facility maturing in three years, according to a person with knowledge of the matter, who declined to be identified because the deal is private.
The loan for the Swiss chemical maker is the biggest covenant-lite deal, which doen’t carry typical lender protection such as financial maintenance requirements, according to data compiled by Bloomberg. Moody’s Investors Service changed its outlook on Ineos to positive on April 20, saying that the loan provides the company with a ‘higher degree of financial flexibility’ due to the removal of the covenant restrictions.
The Rolle, Switzerland-based company reduced an eight-year bond sale to $775 million, from $2.2 billion initially proposed, according to data compiled by Bloomberg.
The $2 billion debt will pay interest at 5.25 percentage points more than the London interbank offered rate, while the euro-denominated portion will pay 5.5 percentage points more than Euribor, the person said. The $375 million portion will pay 4.25 percentage points more than Libor. All three slices will have a 1.25 percent minimum on the lending benchmark.
Original Issue Discount
Both slices of the six-year debt will be sold to investors at 98.5 cents on the dollar, the person said, while the three-year portion will be sold to investors at 99 cents on the dollar. Original issue discounts reduce proceeds for the company and boost the yield to investors.
Richard Longden, a London-based spokesman for Ineos, declined to comment.
The loan will have so-called incurrence-based covenants rather than financial-maintenance requirements, and proceeds will be used to refinance part of about $3.6 billion of outstanding senior credit facilities, the company said April 16. The refinancing is being organized through the company’s wholly-owned units Ineos Finance Plc and Ineos US Finance LLC, according to a statement.
Lenders will receive soft-call protection of 102 cents and 101 cents, the person said, meaning that Ineos would have to pay 2 cents more than face value and a one cent premium to reprice the debt in its first and second year, respectively.
Lenders may receive portions of the debt tomorrow morning, New York time, said the person. A three-year piece denominated in euros has been eliminated.
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