FiberMark has lined up $155 million in exit financing provided in part by a lender that surprised the company with its interest. "When I saw Silver Point [Capital] show up on the list, I asked myself, 'What are they doing there?'" said John Hanley, cfo of FiberMark. But the hedge fund, an unsecured creditor to the company that had just won a protracted battle against two other members of FiberMark's creditors' committee, made the best pitch. "These hedge funds are moving into the marketplace and looking at ways to control the capital structure," said Hanley. "They are competing with the traditional DIP [debtor-in-possession] lenders. The only way they can compete is to offer terms that are competitive."
Silver Point Finance has underwritten a five-year, $75 million non-amoritizing term loan that will be used to pay the firm's unsecured creditors. Two revolvers -- a E40 million ($50 million) facility to be used for the company's German operations, and a $30 million facility for the firm's North American business were underwritten by GE Commercial Finance. Pricing on the term loan is LIBOR plus 6 1/2%. Pricing on the GE facilities could not be determined by press time.
In addition to the terms the hedge fund offered, one of the key points of its bid was its willingness to live with the deal's security. Hanley said it was not easy to find banks that were comfortable with the security the company's North American assets -- it could provide in its lending agreements. The firm canvassed 13 institutions for the $75 million facility. That list was winnowed down to three financial institutions. "Silver Point was the firm we chose because of their ability to deal with the security they would receive on the notes," said Hanley.
GE Commercial Finance was among the banks on the shortlist. FiberMark chose GE Commercial Finance to underwrite its revolving credit facilities. GE Commercial Finance underwrote FiberMark's debtor-in-possession financing, and was the lead bidder on its first exit financing, which was derailed because of the dispute between Silver Point and a pair of other creditors, American International Group and Post Advisory Group (CIN, 8/29).
The E40 million financing replaces a $30 million facility and will be used to expand its German operation. FiberMark will use the $30 million revolver to provide working capital to its North American operation, which are in rehabilitation. The financing will also be used to fund the costs associated with its emergence from bankruptcy, including its reorganization plan and lawyers' fees.
