Owens-Illinois is working up a $2.1 billion refinancing credit that is set to emerge in the near future as the company seeks to tackle a maturing $2.45 billion debt load. The exact date of the deal's launch could not be confirmed, but bankers said it is anticipated very soon. Deutsche Bank, Bank of America, Scotia Capital, Citigroup and Bank One are the expected leads on the deal. The expected structure should shape up as a $600 million "B" loan with price talk in the LIBOR plus 31/2-4% range, a $750 million "A" piece in the LIBOR plus 3-31/2% range, and a $750 million revolver ranging from LIBOR plus 21/2-3%. A banker familiar with the deal said the structure and terms are not yet final.
Officials at the banks tapped as likely leads either declined to comment or could not be reached by press time. An Owens-Illinois official declined to comment, but the company had announced in a February conference call plans to refinance an April 2001 credit facility--initially for $4.5 billion--before the end of June (LMW, 2/24). An official familiar with the company said after paying down a portion of the $4.5 billion credit with a high-yield issuance and an asset sale, Toledo, Ohio-based Owens-Illinois' credit now includes a $2.4 billion revolver and a separately funded $500 million loan.
The company created the $500 million loan by carving out some of the funded portion of the revolver. It is not technically a "B" tranche, but it "looks and smells" like an institutional piece, the official said. That allows institutional lenders to buy into the initially all pro rata deal and trade it in the secondary market. The loan is priced at LIBOR plus 21/2%. The lenders on the carved-out loan will most likely buy into the new "B" piece because of the juicier rate, the banker noted. An investor added the company's past efforts to pay down its bank debt could reflect positively on the deal.
Kohlberg Kravis Roberts & Co. owns about 25% of the company. Market players questioned if the credit would be only-stock secured, as KKR traditionally does not pledge more than stock collateral on its bank deals. However, the existing credit is guranteed substantially by all of Owens-Illinois' domestic assets, by shares of domestic subsidiaries and by other forms of collateral. Owens-Illinois' existing credit is rated BB/B1. The company reported $5.34 billion in total debt as of last December, while the company's first quarter earnings call is scheduled for this Wednesday. The official expected that details regarding refinancing plans could be addressed at that time. --J.M.
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