Credit Suisse First Boston and Bank of America's deal for Flowserve, which backs the acquisition of Invensys' valve division, is expected to join the club of credits recently oversubscribed, according to bankers. The seven-year, $735 million "B" loan was launched to institutional investors on Tuesday and carries a LIBOR plus 3 1/4% spread. A banker explained the "B" backs the $535 million acquisition and refinances existing debt. It could not be ascertained if pricing will flex yet, as the credit has only just been launched, said a banker.
The pricing on the old credit, also led by B of A and CSFB, is 1/4% higher at LIBOR plus 3 1/2%. After the acquisition is completed Flowserve will keep the same debt to EBITDA levels though, said Sean Clancey, a spokesman for Flowserve. CSFB is the syndication agent and B of A is administration agent on the new deal.
The two banks hit a home run with the $800 million term loan "B" for DaVita, despite a bumping up of leverage. The proceeds from the deal, which blew out but has yet to close, will fund a stock repurchase, but high predictable cash flow and a proven track record in the bank-debt market convinced hungry buysiders. The pro rata, which breaks into a $150 million five-year revolver and a $200 million term "A" loan, is still moving through the market, said a banker. Pricing on the pro rata deck is LIBOR plus 2 3/4%.