First Union is in the market with a $200 million credit facility for Dairy Farmers of America, Inc. The 364-day facility replaces the company's existing $175 million, 364-day credit. In addition to the 364-day, the company will amend its $175 million, three-year revolver. Jerry Boss, cfo, said the company needed to increase the credit by $25 million for use as a commercial paper backstop and for other general corporate purposes. "We wanted to add more liquidity," said Boss.
Pricing on the new credit is expected to inch up a bit to LIBOR plus 87.5 basis points if untapped compared to pricing on the old credit, which was LIBOR plus 52.50 basis points. There will be a fee of 12.5 basis points if untapped. "Spreads are just wider than where they used to be," said Boss, explaining that the increased pricing is just a function of market conditions. The bank meeting was held last week.