Gibraltar Industries has entered into a five-year, $250 million revolver with Key Bank, taking over from J.P. Morgan as lead arranger. The facility, which can be expanded by $50 million, replaces a $300 million revolver. Gibraltar had a longstanding relationship with Key Bank and J.P. Morgan, said Kenneth Houseknecht, v.p. of investor relations. "It was just an evaluation of relationships and opportunities and the decision was made to go with Key Bank," he noted. "We had discussions with all the banks in the group about various roles and potential areas of participation and the decision was made for Key Bank to lead." He declined to elaborate on the reason why Key was selected. J.P. Morgan is syndication agent on the deal.
According to Houseknecht, the new facility provides better terms, greater flexibility and lower overall costs. "This was just the result of Gibraltar's continued growth and it was just an opportune moment to look at the capital structure of the company," he said. "It was a different interest-rate environment today than when we put that last facility in place," he said.
Gibraltar's previous facility, which was a $290 million revolver with a $10 million expansion feature, was not set to expire until June 2007. According to a 10-K filing, the weighted average interest rate of the revolver borrowings was 4.59%. The company had $150 million outstanding. Last June the company executed a $75 million, seven-year private placement with The Prudential Insurance Company of America that was used to pay down the revolver. The senior secured note has an interest rate of 5 3/4%.