February 1, 2018 / 6:16 PM / 9 months ago

LPC-EaglePicher LBO backed by US$565m of term loans

NEW YORK, Feb 1 (Reuters) - US specialized battery company EaglePicher Technologies LLC’s leveraged buyout by private equity firm GTCR will be backed by US$565m of institutional term loans, two sources familiar with the matter said.

Jefferies will lead a bank syndicate that includes Barclays and RBC Capital Markets, the sources said.

The financing is structured as a US$405m secured term loan with a first priority claim and a US$160m secured term loan with a second priority claim, the sources said.

The debt package will include a revolving credit facility. Its size has not yet been finalized.

Jefferies, RBC and GTCR declined to comment. Barclays did not respond to requests for comment.

The acquisition was announced on January 23. EaglePicher is currently part of Vectra Corp, the specialty materials and chemicals firm previously known as OM Group Inc.

Vectra is owned by private equity heavyweight Apollo Global Management, which took the company private in 2015 in a roughly US$1bn deal.

Apollo is planning to carve out Vectra’s other business, magnetic material maker Vacuumschmelze, which it will continue to own.

LBOs have accounted for 12% of year-to-date US leveraged loan volume, which at $86.6bn as of January 31 is down 8% year-over-year, according to Thomson Reuters LPC.

Syndication of the EaglePicher debt is expected to launch in late February, with funding and closing slated for early March, the sources said.

The loans will bring leverage to 5 times through the senior tranche and 7 times total, based on US$80m on last 12 months’ Ebitda, or earnings for interest, taxes, depreciation and amortization.

GTCR will write an equity check for over 40% of capitalization, implying total capitalization of around US$950m. (Reporting by Andrew Berlin; Editing By Michelle Sierra)

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