March 13, 2017 / 11:39 AM / 4 months ago

LPC-Paroc launches €505m dividend recap loan

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LONDON, March 13 (Reuters) - Finnish insulation material maker Paroc has launched a €505m dividend recapitalisation that will refinance existing bonds and pay a dividend to shareholders, it announced on Monday.

CVC agreed to buy Paroc in October 2014 for €700m from a consortium of banks and institutional investors that were former lenders to the company, which took control from Bahrain-based investment firm Arcapita in 2009.

After steady growth and good performance, shareholders are set to take around €55m as a dividend payment from Paroc, partially through the new loan and from cash on balance sheet, banking sources said.

Paroc is the latest company to take advantage of Europe’s liquid leveraged loan market, raising fresh debt at attractive rates from cash-rich institutional investors eager to put money to work and buy new paper.

A new €435m seven-year covenant-lite loan B will refinance Paroc’s existing €230m senior secured floating rate notes due 2020 and €196m senior secured fixed rate notes due 2020, paying 5.25% and 6.25%, respectively.

The notes were raised in May 2014 and included a portability clause, which allowed the debt to stay in place after a change in ownership, lessening the need for CVC to raise fresh debt at the time of the buyout.

The new financing also includes a €70m revolving credit facility.

Deutsche Bank and Goldman Sachs are joint global coordinators and bookrunners on the deal, alongside joint bookrunners Bank of America Merrill Lynch, ING and Nordea, the sources said.

The financing is set to be shown to lenders at a bank meeting in London on Tuesday, with commitments due March 24. The loan will be offered with 101 soft-call protection, the sources said.

“The Scandi market hasn’t had the prolonged downturn of other European markets. Paroc has seen some growth in terms of volume and performed well,” one of the sources said.

Editing by Christopher Mangham

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