PolyOne Corp., a polymer services company, has completed a $575 million debt refinancing plan to gain access to the liquidity necessary to repay $87.8 million of senior debt due to expire this September, said Dennis Cocco, chief investor and communications officer for PolyOne. Citigroup, PolyOne's relationship bank, led the new deal, which includes a three-year, $50 million revolver, a three-year, $225 million accounts receivable (A/R) sale facility and $300 million of 105/8% senior unsecured notes.
The new facility was completed primarily because of debt scheduled to mature this fall, but the robust high-yield debt market also provided incentive, Cocco noted. Funds from the new notes were used to repay the outstanding balance on the old credit facility and for the repayment of the 93/8% senior notes due in September. The size and pricing of the old bank debt facilities could not be determined. The new A/R sale facility is priced at LIBOR plus 3%, with a 50 basis point commitment fee. PolyOne is satisfied overall with the pricing, considering the market, although "no one is ever thrilled to pay over 10% for senior notes," noted Cocco.
The new financing gives the polymer services company more flexibility because a debt ratings trigger present in the previous A/R sale facility is absent from the new debt. A ratings trigger could potentially prohibit PolyOne's ability to access the funds available under the credit, so the new facility stabilizes the company's liquidity in the face of economic downturn, explained Cocco.