Credit Suisse First Boston is set to launch this week its long-awaited deal for Akron, Ohio-based Roadway Express, backing the acquisition of Arnold Industries. The $325 million credit comprises a five-year, $150 million revolver and a five-year $175 million term loan, with a spread of LIBOR plus 21/ 2%, based on a grid. There is a 40 basis points commitment fee on the revolver. CSFB syndication officials did not return calls.
The total debt package involved is $650 million with Arnold Industries costing Roadway $475 million. This is Roadway's debut in securing bank debt, and CSFB was chosen after being very responsive in negotiations, according to Dawson Cunnigham, executive v.p., and cfo of Roadway (LMW, 8/27). Standard & Poor's assigned a BBB rating to the bank facility and proposed $225 million senior notes due 2008. The outlook is stable.
The ratings reflect Roadway's strong competitive position in the national less-than-truckload (LTL) market, and solid financial profile. The acquisition of Arnold improves Roadway's business position modestly, but the cyclical and competitive nature of the LTL trucking market is a concern, according to Standard & Poor's. The weak economic environment, made worse by the events of Sept. 11, 2001, will likely challenge plans for improved profitability. However, both companies have solid records of successful operations.