TrizecHahn USA tapped its relationship banks for a best-efforts deal to secure a $350 million, three-year revolver instead of seeking a fully underwritten facility. The company saves by not paying a bank to underwrite the deal, said Jeffrey Echt, senior v.p. of finance and treasurer of TrizecHahn Office Properties, a subsidiary of the parent. He declined to comment on the amount saved.
The funding was secured in two steps. In December, Deutsche Bank, Bank of America, Bank of Montreal, and Bank of Nova Scotia committed $200 million. The company rounded up the $150 million balance in January and landed commitments from ING Barings, Dresdner Bank, LaSalle Bank, Key Bank, Union Bank of California, US Bank, and Comerica. Echt said he believes that TrizecHahn could have obtained the full $350 million in December if the company had opted for syndication of the full amount. "There was very little syndication risk," he said.
The revolver was obtained in anticipation of a reorganization plan this spring that will include the launch of a real estate investment trust. TrizecHahn felt that it was important to solidify its bank group before this change, explained Echt. "We wanted to make sure that we have varied sources of capital," he said. The credit facility was key for maintaining and developing the company's banking relationships, he continued, adding that the participating banks have worked with the company on other projects in the past.
Echt declined to comment on the pricing of the deal. He did note, that it was "significantly less" than the company's former credit facility provided by Deutsche Bank and CSFB because the deal's borrowing base depends on the value of its unencumbered assets. Deutsche Bank is the administrative agent. B of A is the syndication agent. BMO, Scotia and ING are the co-documentation agents.