Salomon Smith Barney and Bank of America are doing preparation work on a $675 million credit for Rayovac Corp., backing its $262 million acquisition of the consumer-battery operations of Hannover, Germany-based Varta. The Varta consumer business outside Germany will be bought outright, while the German consumer battery operation will be set up in a joint venture that will be 51% owned by Rayovac.
The credit is split into a $375 million U.S. institutional "B" loan, a $100 million euro-denominated term loan and a $200 million multi-currency revolver, explained a banker. There will be a bank meeting in Germany on Sept. 5 and shortly afterwards the U.S. meeting will be held, she said. Spreads are not yet finalized for the tranches.
Rayovac is a Madison, Wis., manufacturer of general batteries. The Ba2 ratings on the existing bank debt, which will be refinanced in the transaction, are on review for possible downgrade by Moody's Investors Service. The agency will evaluate the potential risks related to increased financial leverage. Calls to officials at Rayovac were not returned.