Milbank LLP has advised the arrangers in relation to a new amendment for Portugal-based packaging firm Logoplaste, which has created the first institutional term loan with interest payments directly linked to Environmental, Social, and Governance (“ESG”) factors. The Carlyle Group–backed firm has received approval from its full syndicate to tweak the pricing structure on its existing €570 million financing package so that the margin ratchets according to how much CO2 the firm is able to save.
Logoplaste is a rigid plastics packaging producer that operates on an onsite operational model that sees most of its facilities located within its customers’ own premises or nearby. This not only saves on transportation costs, but also means that the firm reduces its CO2 emissions. In 2019, Logoplaste estimated that its model saved more than 12,000 tonnes of CO2 compared to the market norms – equivalent to the emissions of around 6,900 transatlantic flights, or the amount consumed by 557,000 trees every year. The firm aims to increase this CO2 saving in 2020. It is this CO2-saving KPI that Logoplaste asked its lenders to incorporate into the current senior facilities agreement (“SFA”), including a ratchet mechanism to adjust its debt spreads based on the annual evolution of this ESG criteria.
All of Logoplaste’s existing TLB, its €50 million capex facility, and its €150 million revolving credit facility will now carry the ESG-linked pricing ratchet after Logoplaste received the required consents to the amendment request.