Tighter Pricing For Lenox Acquisition Financing

The UBS-led $275 million credit facility to back Department 56's $190 million acquisition of Lenox from Brown-Forman Corp.

  • 12 Aug 2005
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The UBS-led $275 million credit facility to back Department 56's $190 million acquisition of Lenox from Brown-Forman Corp. hit the market last week with tighter pricing than anticipated. The deal consists of a five-year, $175 million asset-based revolver and a six-year, $100 million term loan. Pricing is LIBOR plus 2 1/4% on the revolver and LIBOR plus 3 1/2% on the term loan. The term loan had been talked at LIBOR plus 4% prior to the bank meeting. Leverage is approximately 3.5 times. The acquisition is expected to close as early as the end of August or possibly in early September, a spokesman for Brown-Forman said.

The spokesman explained that about 96% of the company's profits come from its beverage side and it has decided to concentrate on that core business, thus selling Lenox, a designer, manufacturer and retailer of fine china, crystal and dinnerware. The company lists Jack Daniel's Tennessee Whiskey, Southern Comfort and Korbel California Champagnes as products it makes or markets.

In February, Brown-Forman announced it was exploring strategic alternatives for Lenox and hired Goldman Sachs as its exclusive financial advisor. After receiving bids from a number of companies, it thought Department 56 had the best offer, the spokesman said. Timothy Schugel, Department 56's executive v.p. and cfo, did not return calls.

Moody's Investors Service assigned a Ba3 rating to the ABL and a B1 to the term loan. Standard & Poor's assigned a BB- rating to both tranches. S&P estimates that at closing, Department 56 will have about $203.5 million of total debt outstanding.

  • 12 Aug 2005

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Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Citi 7,029 20 10.95
2 Bank of America Merrill Lynch (BAML) 6,703 19 10.45
3 JP Morgan 4,776 10 7.44
4 Credit Suisse 4,718 9 7.35
5 Deutsche Bank 4,262 13 6.64

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3 JPMorgan 55,390.36 159 9.46%
4 Citi 55,051.46 160 9.40%
5 Credit Suisse 43,756.73 120 7.47%