Gardner Denver Sets Rate on LBO Loans as NYSE to Takeover LiborChristine Idzelis
Gardner Denver Inc., the industrial equipment maker being bought by KKR & Co., proposed rates on $2.3 billion of loans as the administration of the lending benchmark for such debt will be taken over by the operator of the New York Stock Exchange.
Gardner Denver offered lenders 4 percentage points to 4.25 percentage points more than the London interbank offered rate for a $1.8 billion term loan, according to a person with knowledge of the transaction, who asked not to be identified because terms are private. Libor, the variable rate that serves as a benchmark for high-yield loans, would have a 1 percent floor.
NYSE Euronext will replace the British Bankers’ Association as Libor’s administrator in early 2014, the London-based lobby group that started the benchmark more than two decades ago said in a statement today. The U.K.’s Financial Conduct Authority began regulating Libor in April as part of an overhaul after regulators found banks had tried to manipulate it to profit from bets on derivatives.
KKR agreed to acquire Gardner Denver, based in Wayne, Pennsylvania, in a leveraged buyout for about $3.7 billion. The deal is valued at about $3.9 billion including the assumption debt.
To help finance LBO, the company is also seeking a $525 million loan that is denominated in euros and would pay interest at 4.25 percentage points to 4.5 percentage points more than Euribor, with a 1 percent floor on the lending benchmark, the person said.
Gardner Denver is offering both loans to investors at a discount of 99 cents on the dollar, according to the person. Discounts reduce proceeds for the borrower and boost the yield for investors.
Loan prices rose 0.11 cent on the dollar today to 97.53 cents, according to the Standard & Poor’s/LSTA U.S. 100 Leveraged Loan index.
Guggenheim Partners is seeking a $700 million term loan to refinance debt, relying on Bank of America Corp. to arrange the deal, according to a person with knowledge of the financing, who asked not to be identified because it’s private. The company proposed paying 3.5 percentage points more than Libor and offered investors a discount of 99 cents on the dollar.
Lions Gate Entertainment Corp., the maker of the “Twilight” teen vampire movies, is asking lenders for a $200 million second-lien term loan that would pay interest at 4.5 percentage points more than Libor, a separate person said. The lending benchmark would have a 1 percent floor.
The Santa Monica, California-based company proposed selling the loan, which will be used to redeem 10.25 percent notes, at a discount of 99 cents on the dollar.
Credit Suisse Asset Management Ltd. is raising a 308 million-euro ($393.3 million) collateralized loan obligation, according to three people with knowledge of the matter, who asked not to be identified because the deal is private. CLOs buy leveraged loans and package them into securities of varying risk and return.