Carlyle's Breed Deal Presenting Tough Sell

  • 06 Apr 2003
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The acquisition credit for Carlyle Management Group's acquisition of Breed Technologies on behalf of Key Automotive Group is still presenting a tough sell, as investors eye auto-sector deals with caution. Merrill Lynch Capital and Citibank have already altered pricing and the structure of the credit, carving a $50 million, six-year silent lien "C" loan out of the senior debt and pricing it at LIBOR plus 10%. The $210 million "B" is priced at LIBOR plus 41/2% and the $100 million revolver is priced at LIBOR plus 4%. Michele Kovatchis, the banker at Merrill working on the deal and a Citibank spokeswoman declined comment. Prior to the changes the credit consisted of a $110 million revolver and a $250 million "B" piece.

Added to the tough sector, which is expected to worsen this quarter, Key and Breed are also considered second-tier players to competitors Collins & Aikman and TRW Automotive, said one investor, who was passing on the deal. Another buysider said, "This is a tougher one, with Carlyle buying one company that has been in bankruptcy [Breed], to merge with another they brought out of bankruptcy [Key]. They worked some magic with Key, and they are hoping they can do the same with Breed," he said.

A spokesman for Key Plastics, a part of Key Automotive, said the deal is still expected to close in mid-April, and the two banks are going through syndication. He declined further comment on the financing. Addressing concern over the auto-sector, the spokesman said the volume of vehicles sold this year is expected to be between 15.5 million to 16.5 million, the fourth best year ever. Additionally, Breed has been out of bankruptcy for a year, he said. Like Key, it had balance-sheet issues. But just as Carlyle brought financial and management discipline to Key, they will bring this to the table with Breed, he explained. One middle-market banker said Kovatchis was the point person for Key Plastics at Heller Financial. Citi and Heller were the leads on the original credit that backed Carlyle's acquisition of Key, which is why Merrill's middle-market financing arm got the lead role, he said.

  • 06 Apr 2003

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Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Citi 7,171 21 10.72
2 Bank of America Merrill Lynch (BAML) 6,901 20 10.32
3 JP Morgan 4,776 10 7.14
4 Credit Suisse 4,718 9 7.05
5 Lloyds Bank 4,420 14 6.61

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1 Wells Fargo Securities 68,611.22 170 11.38%
2 Bank of America Merrill Lynch 59,056.08 169 9.80%
3 JPMorgan 56,861.85 163 9.43%
4 Citi 56,521.05 165 9.38%
5 Credit Suisse 44,888.95 123 7.45%