By Peg Brickley
Banks are lined up to provide up to $1.55 billion worth of loans
to W.R. Grace & Co. (GRA) when the specialty chemical company
ends a dozen-year stay in bankruptcy at the end of this month,
court papers say.
The financing, which carries some $21.25 million worth of fees,
is being coordinated globally by affiliates of Goldman Sachs Group
Inc. (GS) and Deutsche Bank AG (DB). It involves affiliates or
units of Bank of America Corp. (BAC) Citigroup Inc. (C), HSBC
Holdings PLC (HSBC), Commerzbank AG (CRZBY), KeyBanc Capital
Markets Inc., PNC Financial Services Group Inc. (PNC) and Sumitomo
Mitsui Banking Corp. (J.SMF).
At a Jan. 29 hearing in the U.S. Bankruptcy Court in Wilmington,
Del., Grace will seek court authority to enter into the loan
commitments along with other final touches on a Chapter 11
restructuring that will remove from the Maryland company the threat
of billions of dollars worth of liabilities for injuries linked to
asbestos, a toxic material used decades ago.
Bankruptcy exit financing is "likely to include" a $700 million
senior secured term loan, a $200 million euro equivalent senior
secured term loan, a $250 million senior secured delayed draw term
loan, a senior secured revolving loan of up to $250 million and a
multicurrency senior secured revolving loan of up to $150 million,
according to papers filed Tuesday.
The money will be used to "pay in full all outstanding claims,"
left at the end of the bankruptcy, such as the $1.1 billion Grace
has agreed to pay investors in the bank loans it carried with it
into bankruptcy in 2001.
Additionally, there will be cash contributions to the trusts
that will pay off the asbestos claims that drove Grace to seek
Chapter 11 protection, as well as money for working capital and
other general corporate purposes for Grace.
The revolving loans likely won't be drawn down on the exit date,
court papers say, but the money will be there for Grace, once a
prime lawsuit target for victims of asbestos-related disease and
now a thriving global specialty chemical and building material
producer with a market capitalization of $7.4 billion.
Grace has been assembling its exit financing package for years,
while its Chapter 11 plan worked through a series of courts. In
November 2013, after a federal appeals court in Philadelphia ruled
for Grace on a series of appeals of its confirmed Chapter 11 plan,
talks with the banks started up again in earnest, court papers
say.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to
http://dbr.dowjones.com)
Write to Peg Brickley at peg.brickley@wsj.com.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires