Citigroup and Calyon are in the market with a $640 million deal for Envirocare of Utah that will finance a $270 million dividend for owners Lindsay Goldberg & Bessemer, Creamer Investments and Peterson Partners. The deal comes just two months after the banks completed a $340 million credit to finance the acquisition of the radioactive waste company from Khosrow Semnani for a reported $500 million. A bank meeting is being held today at the St. Regis hotel in New York and ahead of the meeting there are rumblings. "It's pretty aggressive. It's a huge dividend," said one investor.
"Envirocare was just purchased about a month [or two] ago and they are taking a two-time dividend. They are just leveraging up the first lien and second-lien. It's a very aggressive transaction," said a lender. Leverage ratios are 3.1 for the first lien and 4.2 for the second lien, "well within other leverage ratios doing dividend recaps," a banker said.
Lenders seemed more concerned with security than leverage. "Leverage does not seem very high, but you don't have any security here," one potential investor said. "What are you going to do, go sell some nuclear waste?" Still, lenders said the deal is expected to get done as investors hunt for assets and the company was a big hit in the first go around. Indeed, the old $330 million "B" loan, which is priced at LIBOR plus 3%, was quoted at 102-102 1/2 after being oversubscribed by three times during syndication.
The new deal comprises a $30 million revolver, a $440 million "B" loan and a $170 million second lien. Price talk for the revolver and "B" loan is LIBOR plus 2 3/4%. The second lien, which has 102, 101 call protection, is priced at LIBOR plus 5%.
The original deal comprised a $10 million revolver and the $330 million "B." Pricing was reversed from LIBOR plus 3 1/2% to LIBOR plus 3% on oversubscription. There was also a step down to LIBOR plus 2 3/4% if leverage went below 2.5 times. Officials at the company and Lindsay Goldberg did not return calls. The banks either declined comment or did not return calls.
