Foamex International, a manufacturer of polyurethane foam with USD1.25 billion in revenue last year, is considering entering its first interest-rate swap to even its ratio of fixed-to-floating debt, according to George Karpinski, treasurer in Linwood, Pa. The company has about USD500 million in fixed-rate debt and some USD300 million in floating-rate debt. "It's definitely something we've been thinking about. Right now we're pretty heavy on the fixed debt side," he added.
If the Federal Reserve leaves interest rates on hold, Foamex could look to enter a swap in which it pays floating by the end of the third quarter, Karpinski said. The company would seek a rate that was about 350-400 basis points above three-month LIBOR, which is currently hovering at 2%.
Karpinski said Foamex is talking to a handful of advisors about using swaps. He declined to name the firms, but analysts who follow the company said the group includes Credit Suisse First Boston, Bear Stearns, JPMorgan and Salomon Smith Barney. Officials at the firm's declined to comment.
The company recently came to market with a USD300 million 10.75% seven-year senior secured offering, led by CSFB and Salomon Smith Barney. Ed Yorke, managing director and co-head of investment banking at CSFB, who worked on the Foamex deal, did not return calls. Michael Del Giudice, managing director in Salomon's investment banking group, who also worked on the transaction, could not be reached for comment.
