Apex Tool Group LLC set the rate it will pay on a $835 million term loan it’s seeking to back the buyout by Bain Capital Partners LLC, according to a person with knowledge of the transaction.
The seven-year debt will pay interest at 4 percentage points to 4.25 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 an borrow in dollars from each other, will have a 1.25 percent floor.
Apex Tool 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.
The term loan will be covenant-lite, meaning the it will not carry typical lender protection such as financial-maintenance requirements, said the person. Leverage, or debt to earnings before interest, taxes, depreciation and amortization, will be 5.4 times total.
Barclays Plc, Goldman Sachs Group Inc., Morgan Stanley, Royal Bank of Canada, Citigroup Inc. and Deutsche Bank AG are arranging the financing, according to the person.
Bain Capital is acquiring the company from Danaher Corp. and Cooper Industries Plc for $1.6 billion and the deal expected to close in the first half of 2013, according to an Oct. 10 statement. Danaher and Cooper each own a 50 percent interest in Apex Tool.