Market players expect allocations for Crown Cork & Seal's new credit to come out soon and are anticipating the company's $500 million "B" term loan to trade above par. The paper is priced at LIBOR plus 41/4%. The company is currently pursuing a refinancing plan that also includes a $550 million revolver. One trader explained that the paper was likely to trade up because the company had trimmed down its bank debt, so the supply of paper relative to demand is less.
The Deutsche Bank and Citibank-led deal is set to take out a $2.3 billion revolving credit facility that was due to mature this December. As of Dec. 31, 2002, about $1.7 billion was drawn on the line. The company's current bank debt is quoted just under par.
In addition to the new facility, Crown Cork is pursuing $2.1 billion in new senior secured notes. These comprise $1.085 billion of 91/2% notes and EUR285 million of 101/4% notes, both second prority senior secured due 2011. Additionally, there will be a $725 million offering of third priority senior secured 107/8% notes due 2013. The company has also commenced a tender offer for $834.5 million in notes due over the next two years. Calls to Timothy Donahue, senior v.p. of finance, were not returned by press time, but according to company filings, the purpose of the refinancing plan is to extend the average debt maturity and increase liquidity and financial flexibility for Crown Cork.