Odyssey-Backed PIP Lines Up $2.2B in Debt Financing, $400M Preferred Equity to Finance Honeywell PPE Unit Acquisition, Replace Existing Debt

Odyssey Investment Partners-backed Protective Industrial Products, or PIP, has lined up a syndicated $2.225 billion debt financing package and $400 million in preferred equity to fund its acquisition of Honeywell International’s personal protective equipment, or PPE, business and replace its existing debts, according to sources.

Goldman Sachs and JPMorgan are leading the $2.225 billion debt financing package, which consists of a $1.925 billion first lien term loan and a $300 million asset-based lending facility, according to sources.

Proceeds from the debt financing will be used to replace and increase PIP’s existing credit facility and to fund its $1.325 billion acquisition of Honeywell’s PPE business, according to sources.

Goldman Sachs led the $400 million preferred equity package raised to support the acquisition of Honeywell’s unit, whose products include respiratory protection, hearing aids, work boots and face masks, which were in high demand during the coronavirus pandemic.

The coupon is expected to come in at a fixed rate of 14%, two sources said. Octus previously reported that a preferred equity package was in discussion among lenders.

Honeywell International announced that it would sell its PPE unit to PIP for $1.325 billion in an all-cash transaction on Nov. 22, according to a release. The transaction is expected to be completed in the first half of 2025.

Several business development companies lent to PIP, which was acquired by Odyssey in 2020.

Blue Owl Capital Corp., First Eagle Private Credit Fund and Nuveen Churchill Direct Lending Corp. are among the BDCs that hold a portion of a first lien to PIP, according to Octus’s BDC Database. The loan priced at SOFR+400 bps and it is set to mature on Dec. 1, 2027.

Antares Capital held a lender call on Sept. 6 to discuss a $1 billion first lien term loan maturity extension for PIP, as reported.

PIP’s existing $435 million 2027 term loan B was last trading in the secondary on Nov. 25 at 100/100.5, according to Solve.

Honeywell International is a multinational conglomerate that operates in aerospace, building automation, performance materials and technologies, and safety and productivity solutions. The company faced pressure on Nov. 13 from activist investor Elliott Investment Management that said it amassed a $5 billion stake in Honeywell and called on the company’s board of directors to split its aerospace and automation businesses.

Honeywell’s chairman and chief executive officer, Vimal Kapur, has been stepping up efforts to align the company’s portfolio focus and disclosed the potential sale of the PPE unit on the company’s third-quarter 2024 earnings call on Oct. 24, according to Octus’ transcript of the call.

The PPE business has about 5,000 employees and operates 20 manufacturing sites and 17 distribution sites across the United States, Mexico, Europe, North Africa and Asia, according to the acquisition release.

In Honeywell’s third-quarter earnings, the company noted that its operating income decreased by 4% and that its operating margin contracted 180 bps to 19.1% because of “an impairment related to classifying the personal protective equipment (PPE) business as assets held for sale.”

Projected revenue for the PPE unit is about $1.1 billion for full-year 2024, according to Honeywell’s third-quarter earnings release.

Goldman Sachs and JPMorgan declined to comment. Honeywell International and Odyssey did not respond to requests for comment. Latham & Watkins, which advised PIP, did not respond to a request for comment.