Building Product Company Hammers Out Line
Nortek tappedFleet Capital for a $200 million senior secured revolver to pay down existing debt and give the company extra flexibility. The five-year revolver has a pricing option of LIBOR plus 2- 21/ 2%, or Prime Rate plus 1/2- 1%, with $42 million of the credit being used to replace the balance of a Fleet-led term loan that expired last month, according to Edward J. Cooney, v.p. and treasurer of Nortek. The balance of the credit will be used for letters of credit issuance and for general corporate purposes. "It's mainly for flexibility," Cooney told LMW.
The Providence, R.I.- based company closed the new deal in order to refinance the credit of its subsidiary, Ply Gem, with $42 million of the proceeds. The facility is secured by almost all of Nortek's accounts receivable, inventory, intangible assets and principal operating units. Fleet syndicated the asset-based line to nine institutions, including Siemens Capital and Sovereign Bank.
Cooney stated that Nortek's total long-term debt as of this past June was approximately $987 million, while its short-term debt stood around $56 million. Nortek reported $522 million in net sales as of this past June. Nortek is a building products manufacturer and distributor, managing a network of worldwide subsidiaries throughout North America, Europe, and China. Kelso & Company, the New York-based private equity firm, showed interest in acquiring the conglomerate last April, but the buyout did not pan out.