Building products supplier Louisiana-Pacific Corp. took advantage of the hot bank market and an improved financial profile to replace its secured credit facility with a new $150 million unsecured revolver. The unsecured facility is more flexible and eliminates restrictions, explained Mike Kinney, an investor relations official. "When we did our initial revolving facility back in 2001 the banking industry was significantly different than now and we were a very different company," Kinney noted, adding the company now has more cash.
Pricing has also improved. The old facility was priced at LIBOR plus 3%, Kinney noted. The new revolver is priced on a grid tied to ratings and the spread ranges from LIBOR plus .525-1.45%, according to an 8-K filing.
Syndication of the facility was oversubscribed, with all of the existing lenders rolling over and several new banks added. Wachovia Securities and Bank of America served as lead arrangers, while Royal Bank of Canada and The Bank of Nova Scotia acted as co-documentation agents. Export Development Canada stayed in as a participant. "All of the banks have been in our banking relationship for quite a while," Kinney noted. New lenders are Wells Fargo Bank, Union Planters Bank, Sumitomo Mitsui Banking Corp. and First Tennessee Bank National Association. The company moved from Portland, Ore., to Nashville, Tenn., which resulted in the new local bank being added to the syndicate, Kinney explained.