J.P. Morgan
and
Credit Suisse
First Boston
pushed out incumbent
leads
CIBC World Markets
and
Goldman
Sachs
to lead the $275 million
refinancing for
AFC
Enterprises
by offering cheaper
pricing. "CIBC and Goldman were interested in being the lead
arrangers, but J.P Morgan and CSFB offered the best pricing
and capability in the credit markets," noted
Gerald Wilkins,
executive v.p. and cfo of AFC. "CSFB has developed a strong
relationship with the company after a secondary stock offering
which they did a great job on," he added.
Explaining the historic relationship with the previous leads, Wilkins said, "CIBC was intimately involved with AFC after a debt for equity swap five years ago left them with 60% of the company. CIBC sold some of this to Freeman Spogli & Co. and after AFC did an IPO, they sold more. With that relationship watered down, AFC began to develop other banking relationships. Goldman was bookrunner on the IPO, with CSFB and Deutsche Bank. "We still talk to both banks, who did a great job," he added, but "competition is always beneficial to everybody. It is the foundation of the capitalist system."
The loan will refinance the existing credit line
and retire AFC's 10.25% senior subordinated notes that become
callable in May. "We can save 400-500 basis points over the next
few years by replacing the notes with senior bank debt," Wilkins
said. The $275 million loan comprises a five-year $75 million
revolver and $75 million "A" and a seven-year $125 million "B"
tranche. Pricing on the pro rata deck is LIBOR plus 2% with a 1/2%
commitment fee and the "B" carries a LIBOR plus
21/
2% spread. AFC operates restaurants, bakeries
and cafes. Calls to Goldman and CIBC officials were not
returned.
