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Eye Care Co. Envisions Redux

14 Sep 2002

Bank of America and Fleet Bank are shopping a $135 million credit for Eye Care Centers of America, a Thomas H. Lee portfolio company that owns 360 optical stores across the States. The new credit will refinance the existing deal used to back the acquisition by the private equity shop in 1998 for $300 million. "This company stumbled out of the blocks when it was first bought," said a banker. Now, the company has small capex requirements and has met EBITDA targets for the year already, she added.

The $105 million "B" loan is priced at LIBOR plus 4% and the $30 million five-year revolver has a 50 basis points fee on the undrawn, and is LIBOR plus 31/ 4% fully drawn. The credit is rated B+/B2 by the agencies. Last year the bank debt was downgraded by Moody's Investors Service from B1 to the current rating, with the agency citing the very high leverage as a strong factor weighing on the credit. The agency took comfort from the involvement of the sponsors who invested $100 million in 1998. Furthermore, the facility was amended to adjust the amortization schedule and ease financial covenants. But, the B2 rating recognizes the limitations of the collateral securing the debt. Alan Wiley, executive v.p., cfo and treasurer, did not return calls for comment. Officials at the lead banks declined comment on the transaction.

14 Sep 2002