West Pharmaceutical Services has obtained a new five-year, $125 million revolver that refinances short and long-term credit facilities that would have matured next month and in July 2005. "We had to refinance our facility at some point in this time frame and it was a happy coincidence that the market was receptive," said Michael Anderson, v.p. and treasurer of West Pharmaceutical. He explained that even though pricing was similar to the old credits, the pharmaceutical company was able to obtain the best spread available in the last two years.
The new facility replaces a $135 million revolver that consisted of a five-year, $70 million tranche and a 364-day, $65 million revolver that was expiring this July. "We had an expiration coming up on our existing facility that would become a current liability in the third quarter," Anderson noted. Approximately $50 million was outstanding on the old credits. The new revolver is priced on a grid tied to leverage that will range between LIBOR plus 7/81 1/2%. The initial pricing of the revolver is LIBOR plus 1%. Additionally, the revolver is smaller in size compared to the previous one but has an accordion feature which allows drawing an additional $25 million, he said. He added that the new facility will provide substantial liquidity without having to commit to a term loan.
PNC Bank acted as lead bank on both facilities. "They provided us terrific service," Anderson stated. Other banks participating in the new facility are Wachovia Securities, Citizens Bank of Pennsylvania, National City Bank, Manufacturers & Traders Trust Co. and Bank of America. B of A did not participate in the old facility but was chosen by West Pharmaceutical because "We thought it was a good fit [considering] our international needs," he added.