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Executive Dossier

Pareto Industries — 2024 Senior Credit Agreement

Sponsor
Vanguard / Fidelity (public)
Jurisdiction
LSTA / NY law
Agreement
2024-09-18
Cohort
2024 sponsor TLs

Material Holder Protections6 rows

ProvisionStatusPct vs CohortCommentCite
MFN protection on incrementalYes92nd pct50 bps, no sunset; broad MFN with limited carve-outs§2.01(e)
Sacred rights — pro-rata sharingYes88th pctAffected-lender consent required for ranking change (Serta blocker)§10.02(b)
Sacred rights — payment modificationYes94th pctEach affected lender must consent — full package§10.02(c)
Net-short protectionYes85th pctNet-short lenders disenfranchised on consents§10.02(d)
Disqualified institution listYes70th pctBorrower-controlled list, capped at 25 entities§1.01
Open-market purchase restrictionsYes78th pctOpen-market only; no Dutch auction or par-tender§2.05(b)

Material Aggressive Terms8 rows

ProvisionStatusPct vs CohortCommentCite
Incremental debt — $300M + 75% EBITDA + 3.50× ratioYes28th pctTighter than median; ~$700M available today§2.01
J.Crew trapdoor — unrestricted subNo8th pctInvestment cap to unrestricted subs $50M; material IP carve-in§7.03(b)
Serta priming — non-pro-rataNo12th pctAffected-lender consent required for any ranking change§10.02
Chewy dropdown — excluded assetsNo15th pctMaterial subsidiary equity must remain in collateral§7.05
Restricted payments — builder basketYes35th pct50% CNI starter; 1.0× FCCR cap on cumulative RP§7.02(g)
Prepayment — ECF sweepYes75th pct75% of ECF with stepdowns at 3.5× and 3.0× leverage§2.05(c)
Collateral — IP transfer carve-outNo10th pctMaterial IP explicitly carved into collateral§7.05(d)
Sale-leaseback capacityYes30th pct$100M general basket; ratio test capped at 3.5ק7.06

Pro forma capital structure$ millions

TrancheAmountRateMaturityLeverage
Revolving credit facility
First lien · undrawn at close
300.0SOFR + 2002029—
Term loan A
First lien · amortizing
750.0SOFR + 22520291.85×
Senior notes
First lien · 144A
500.05.875%20313.08×
Total funded debt
1,250.0——3.08×

Key considerations

Pareto's 2024 senior credit agreement reads as a stand-out among the 2024 sponsor-TL cohort: capacity is tightly constrained, the J.Crew trapdoor is explicitly blocked via material-IP carve-in and a $50M cap on Unrestricted-Sub investments, and Serta-style priming requires affected-lender consent.

Interest-coverage covenant of 2.0× plus the 50-bps no-sunset MFN give existing lenders meaningful structural protection against both stress and non-distress liability-management mechanics.

Where Trinseo's 2025 agreement sits at the aggressive end of the cohort, Pareto sits at the lender-friendly end. Useful as a benchmark when evaluating Trinseo's structural risk in absolute terms.

Auto-drafted · analyst-editable in Phase 4

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