Massive buyside demand for the SunTrust Bank and BANK ONE led "B" term loan for Atlanta-based Printpack pushed pricing down from a starting point of LIBOR plus 31/ 4% to LIBOR plus 23/ 4% during syndication. "Almost $900 million came in on the targeted $200 million credit," said Trip Ceitter, treasurer of Printpack. "Initially we even considered going out at LIBOR plus 31/ 2%," he added. The seven-year "B" piece was upsized from $50 million to $250 million, while the pro rata was reduced from $200 million to $150 million. "The pro rata was full at $200 million, but we decided to move to the "B" as pricing had come down to similar levels [as the pro rata] and the maturity was longer," he explained.
Pricing on the pro rata, which comprises a $100 million revolver and a $50 million "A" term loan, is also LIBOR plus 23/ 4%, but is based on a grid. The pro rata matures in five years, while the "A" amortizes over five years, Ceitter noted. The pricing will drop as performance improves, he added. BANK ONE was the lead bank on the old $188 million facility, which is being refinanced. The purpose of the loan is also to redeem some 9 7/8 % notes due in 2004 and the 10 3/4 % notes due 2006. "The timing economically seemed right," he noted. The deal will be funded April 25, when documentation has been completed.
Printpack, which is a flexible packaging producer, is one of a number of companies that have benefited recently from the shortage of new issuance for middle-of-the-road paper. The credit was assigned a BB rating by Standard & Poor's, which notes the company's much improved performance since the acquisition of James River in 1997. An improved cost structure and debt to EBITDA has gone from a peak level of 6.7 times to 2.8 times since then. Financial flexibility is further aided by the availability under the new revolver and the extended debt schedule, according to S&P.