KIK Custom Products Inc, the cleaning-products company backed by private equity firm Centerbridge, has obtained a $150m rescue loan from new lenders, including Oaktree Capital Management, to address a potential liquidity shortfall, according to a report by Bloomberg.
The reports cites unnamed sources familiar with the matter as revealing that the financing, which was raised through a newly created subsidiary and secured against the company’s German assets, carries a three-year maturity with a margin of 5.5 percentage points over the Secured Overnight Financing Rate. KIK also has the option to make in-kind interest payments for the first two years, paying an additional 200 basis points, allowing obligations to be covered with further debt.
The addition of third-party lenders typically gives the new debt repayment priority, which can reduce the value of existing obligations. The loan can be refinanced at par within six months.
KIK’s bonds have been under pressure following a fire at a Georgia facility last year and the shelving of a plant retrofit plan in Alabama. Existing creditors, advised by Centerview Partners and Gibson Dunn & Crutcher, have been engaged in confidential discussions with the company regarding its liquidity requirements.
