Morgan Stanley and Credit Suisse First Boston are in the market with a $175 million add-on "C" loan for engineering equipment company Dresser. The add-on backs Dresser's acquisition of certain businesses of Nuovo Pignone, an Italian subsidiary of General Electric Co. The facility size represents the $170 million purchase price and $5 million in fees. There might be an adjustment to the purchase price due to working capital in the business and rate fluctuations in the euro, a Dresser spokesman said.
One buysider said the new debt is only being offered to existing lenders. The add-on piece will be priced the same as Dresser's existing $235 million "C" loan, which carries a spread of LIBOR plus 2 1/2%. In March, Dresser refinanced its $382 million "B" loan by putting the $235 million "C" loan in place and carving out a $125 million unsecured term loan (LMW, 3/29). The spokesman said the company had room to do the add-on under the terms of the refinancing, so there was no need to ask for special covenants or amendments. The "C" loan permitted up to $300 million of acquisitions and $250 million of new secured debt, according to Moody's Investors Service. Morgan Stanley and CSFB are the existing leads on Dresser's facility, which also includes a $100 million revolver.
Dresser is acquiring the retail fueling systems business of Nuovo Pignone and Dresser's Dresser Wayne unit makes and supplies retail petroleum fuel dispensers. The spokesman said the two businesses serve different geographic models and there is very little overlap. "We'll have an opportunity to rationalize all of our products and only produce a few models globally and create synergies that way--take the best from both companies," he said. First Reserve Corp. and Odyssey Investment Partners are the majority owners of Dresser.