Lead banks Wachovia Securities, Morgan Stanley and Goldman Sachs tightened pricing on the $650 million credit facility for Chiquita Brands International to fund its $855 million acquisition of Fresh Express. The deal was oversubscribed in syndication and the institutional tranches broke for trading above 101.
The facility consists of a $150 million revolver, a $125 million term loan "B" and a $375 million term loan "C." Pricing on the revolver is LIBOR plus 2 1/4% and the spread on the term loan "B" and "C" is LIBOR plus 2 1/2%. These terms are lower than initial price talk, which was LIBOR plus 2 1/2% on the revolver and LIBOR plus 2 3/4% on the "B" and "C" loans. The "B" was quoted at 101 3/8-101 5/8 and the "C" was quoted at 101 1/4 - 101 1/2.
There is a pricing grid for the "B" and the "C" loans. If leverage is equal to or below three times, pricing is LIBOR plus 2 1/4%. Below or equal to 2.5 times, it will be LIBOR plus 2%. These prices cannot be accessed during the first full year.
In connection with the acquisition, the company is also planning to offer $225 million of 8 7/8% senior notes due 2015. "We targeted a financial structure that would allow us sufficient liquidity and financial flexibility to execute the transaction and support our sustainable growth strategy going forward," a Chiquita spokesman said on the decision to do a notes offering.
Moody's Investors Service assigned a B1 rating to the credit facility and a B3 rating to the senior unsecured notes.
As of March 31, Chiquita had $250 million outstanding of 7 1/2% Senior Notes, $75 million in shipping debt and $16.7 million in other debt.