Flowserve has tapped Bank of America and Credit Suisse First Boston to lead an upcoming acquisition financing deal after landing the Flow Control Division of Invensys for $535 million last week. "Flowserve was involved in an auction for the division last August, but pulled out after Invensys would not accept the bid," noted spokesman Sean Clancey. "We were very firm on valuations. In December Tyco International pulled back from their proposed bid and our chairman [Scott Greer] got a call to re-enter negotiations in late January," he added. Clancey declined to say how much debt would be involved in the acquisition, but said the company will have no higher overall leverage after closing than the current level, as measured by debt to EBITDA. Equity as well as debt will be used to finance the deal which is expected to close within two months, he noted.
The flow control division is expected to generate revenues of $520 million for the 12 months to the end of March and EBITDA of $87 million. Additionally, Flowserve expects to make costs savings of up to $15 million a year from the acquisition. CSFB is lead arranger and syndication agent and B of A is lead arranger and administration agent. The potential spread and date of a bank meeting have still not been determined, said bankers. Flowserve currently has a $1 billion credit facility that consists of a $350 million term loan "A," priced at LIBOR plus 2 3/4%, a $350 million term loan "B," priced at LIBOR plus 3 1/4% and a $300 million revolver priced at LIBOR plus 2 3/4%. The facility, which is led by CSFB and B of A is rated B1 by Moody's Investors Service.