Copying and distributing are prohibited without permission of the publisher.


CSX Cruises With Commitments

26 Jan 2003

ABN AMRO and UBS Warburg's $175 million "B" loan for CSX Lines was on its way to filling as LMW went to press. The "B" piece is part of a $200 million credit backing The Carlyle Group's $300 million majority stake acquisition of the CSX Corp. subsidiary. The deal launched Jan. 14, and while one banker thought that press relating to CSX's former ceo, John Snow, and his alleged trip-ups as President George Bush's nominee for U.S. Treasury secretary could work against the credit, another banker contended that investors just needed to distinguish CSX Lines' business from others in its sector. He explained that the ocean liner company is a Jones Act-related shipping company, which means it is regulated and protected in its U.S. port-to-port shipping practices. This differs from the more volatile international shipping industry. "The Jones Act makes it more stable," he said. Officials from ABN and UBS declined to comment.

UBS joined the fully underwritten deal days before its launch to retail syndication, one banker noted. Pricing on the "B" is LIBOR plus 4%, while the $25 million revolver priced at LIBOR plus 31/ 2%. There is also a 50 basis point commitment fee on the revolver. CSX Lines' multiples are quoted at 2.5 times. Charlotte, N.C.-based CSX Lines provides domestic ocean liner services and operates in the U.S., Puerto Rico and Guam. The company also owns Horizon Services Group, a cargo management and tracking services unit. The new Carlyle-owned entity will be phased into its new name, Horizon Lines, joining the equity firm's transportation portfolio. CSX will receive $240 million in cash and $60 million in securities in the transaction. Equity for the acquisition, set to close in this quarter, will come from Carlyle's flagship U.S. buyout fund. Officials at Carlyle could not be reached by press time.

26 Jan 2003