American Greetings paid the price of refinancing in a difficult market, as pricing was flexed up and its term loan offered at a discount in syndication. David Poplar, investor relations manager, noted the senior secured credit facility consists of a $105 million, 364-day revolving facility, a $120 million, five-year revolver and a $125 million, five-year term loan. He declined to provide pricing details, but said that the term loan was offered at a discount in syndication to entice investors. Bankers noted that pricing was LIBOR plus 3% on the pro rata and LIBOR plus 41/ 2% on the term loan "B" after a 1% flex upwards. The term loan was also offered at an original issue discount of 97. National City Bank, Goldman Sachs and KeyBank led the deal.
The refinancing repays a $792 million Bank of America-led loan arranged last year. Poplar declined to comment on the change of banks, but acknowledged that there has been a change in the retail trends of the greetings card industry, with discount cards growing at the expense of mainstream companies as a factor in American Greetings' difficulties.
The $1.1 billion refinancing package was done as existing loans and debt were reaching maturity, said Poplar, adding that issuing a mix of loans and bonds provides a healthy balance of debt, with fixed and floating rates. The bank loans totaled $350 million and the company also closed a $250 million, three-year asset-backed trade receivables securitization facility. The company recently completed a convertible senior subordinated note offering for a total of $175 million and also sold $260 million in convertible senior notes.