Mosaic Co. has consolidated borrowings into a new $850 million credit facility designed to simplify the company's financial structure and reduce funding costs. The new deal includes a $450 million revolver, a $50 million "A" loan and a $350 million "B" piece. The credit repays an existing $290 million "B" tranche, a $210 million revolver and an interim revolver of $160 million.
Mosaic was created after Cargill's Crop Nutrition unit merged with IMC Global last October. The $210 million revolver and the "B" loan originated with IMC Global. "Those two separate facilities are being replaced by this one overall credit facility, which now allows the company to finance itself as one as opposed to having effectively two different sides of the business," said Kevin Brindley, Mosaic's v.p. and treasurer. As the combined Mosaic started, the interim credit facility was put in place to meet the needs until borrowings could be combined under a single facility, Brindley noted.
The IMC debt had some restrictive covenants and indentures that limited the amount of senior credit facilities and limited the company's ability to move money to affiliates. Mosaic effected consent solicitations of those indentures to change the restrictions to be able to operate as one company. "It was a step-wise function. We couldn't do them all at once."
Mosaic's existing $210 revolver and the interim revolver were combined into a single facility with pricing at LIBOR plus 1 1/4%. That pricing is the same as what was on the interim facility, but it is much lower than the LIBOR plus 3 3/4% the existing revolver was carrying. Pricing on the "B" loan went from LIBOR plus 4 1/4% to LIBOR plus 1 1/2%. Mosaic originally came out with LIBOR plus 1 3/4% for the new "B." The new deal was oversubscribed and the company was able to flex pricing. "When you combine heavily levered assets with unlevered assets, the blend ends up being less than the prior heavily levered assets, so the financial profile improved," he noted. The "A" loan is priced at 1 1/4%.
J.P. Morgan led both the old and new credits and was chosen over other candidates after the company shopped the deal. Matt Lyness and Tom Bergen at J.P. Morgan were mentioned by Brindley as being instrumental in closing the transaction.