Deutsche Bank and Morgan Stanley are in the market with a $200 million incremental term loan "B" for metal and plastic packaging company Silgan Holdings. In addition, the banks are leading $200 million of 63/4% senior subordinated notes. Alongside $95 million on the existing revolver, Silgan will finance the call of $475 million of 9% senior subordinated notes with the new debt. Pricing on the "B" loan is LIBOR plus 21/4% through May 2004 and then after that time it can go to LIBOR plus 2% if leverage goes under 33/4% times, said a banker.
Moody's Investors Service has assigned a Ba3 rating to the proposed $200 million "B" loan and a B1 rating to the subordinated notes. Moody's has also lowered the rating of the existing $1.18 billion credit facility one notch to Ba3 reflecting the incremental increase in the senior debt and the absence of collateral coverage in a distressed scenario. The proposed credit agreement intends to provide an accordion facility of approximately $125 million.
The ratings are constrained by Silgan's weak balance sheet, its acquisitive growth and some softening in Silgan's core businesses. Without recent acquisitions--Silgan Closures, Thatcher Tubes and Pacific Coast--base business was relatively flat. Positive considerations include the company's solid market position and longstanding relationships with established food and consumer products companies. Officials at Silgan did not return calls and bankers at the two leads declined comment.
|Other Newly Rated Deals*|
|Michael Foods||$595 million||B1||Moody's|
|Michael Foods (FRL)||$135 million||B2||Moody's|
|*Thurs, Nov. 6 through Wed, Nov. 12|