UBS and J.P. Morgan are in the market with a bank loan and equity offering backing a recapitalization for SOLA International, a designer and manufacturer of eyeglass lenses. "We currently have on the books $205 million of 11% Euro denominated bonds placed in 2001 and maturing in 2008,"said Ron Dutt, cfo of SOLA. "SOLA's operating and financial performance has improved since 2001, allowing us the opportunity to tender and exchange this higher-priced debt with lower priced U.S. dollar denominated debt and avoid the Euro exposure."
The recap includes a new six-year, $175 million term loan and a five-year, $50 million revolver led by UBS and J.P. Morgan. Union Bank of California, which currently leads the company's revolver, will be administration agent for the new revolver. A banker said pricing across the board is LIBOR plus 3%.
The firm is raising $100 million through a follow-on equity offering, with the net proceeds being used to redeem 35% of the outstanding 11% senior notes. UBS and J.P. Morgan are book-running managers for the offering. "Our planned secondary equity offering will facilitate this tender, reduce debt, and expand our institutional investor base." said Dutt. "This recapitalization follows successful efforts since 2001 to consolidate manufacturing and distribution facilities, reduce operating expense, and restore North America revenue growth through improved marketing and prescription lab expansion in the U.S." Pro forma leverage after the transaction will be 2.8 times and total debt to capital will be 46%, the banker added.