Spotless sells $US1.08 billion of loans

Pacific Equity Partners takes advantage of record low US interest rates to refinance debt.

Spotless, the outsourced facilities management business of Pacific Equity Partners, has sold $US1.08 billion of loans in a debt refinancing to take advantage of record low US interest rates.

Deutsche Bank AG, Goldman Sachs Group Inc and UBS AG managed the sale, though the loan’s successful closing in September has not prompted Spotless or its owners to appoint advisors to explore an initial public offering.

The company was able to secure better terms after a road show to yield-hungry investors amid evidence that Spotless chief executive Bruce Dixon has improved the business. Dixon has boosted earnings before interest, tax, depreciation and amortization to about $170 million a year, from about $120 million late last year.

Spotless sold $US845 million of first lien loans due 2018 at the US dollar London Interbank Offered Rate plus 400 basis points, giving the loan a yield to maturity of 5.22 per cent with a 1 per cent Libor floor. A further $US235 million second lien loan was also sold at US dollar Libor plus 7.775 per cent, with a 1 per cent Libor floor.

Under Dixon, Spotless has cut layers of bureaucracy, sold a coat hanger business and an international unit, and won contracts such as the catering deal for the 2015 Cricket World Cup. Dixon has organized the business along Spotless’ capabilities, offering multiple services to a company through one point of contact. Spotless now offers food from Melbourne chef Teage Ezard.

Pacific Equity Partners bought Spotless for $724 million last year after Spotless rejected another buyout offer from Blackstone Group. Spotless' enterprise value at the time was $1.1 billion.

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