UNOVA, the troubled supplier of mobile computing and wireless network products, has secured two asset-based credit facilities with a capacity of up to $275 million. The three-year agreements replace a $400 million short-term financing arranged in February with J.P. Morgan Chase, that was set to expire in November, explained David Brooks, director of investor relations at the Woodland Hills, Calif.-based company, which also supplies manufacturing systems for the auto and aerospace industries.
Bank of America and Heller Financial were selected to lead the syndicate for a $200 million line, and a $75 million term loan was obtained from Special Value Investment Management. Pricing on the $200 million revolver is LIBOR plus 31/2 %. Brooks declined comment on the term loan spread and on why J.P. Morgan was not chosen to lead the new facility, though he did say that the move to a longer-term facility is beneficial. Borrowing availability on the revolver is based on levels of eligible accounts receivables and inventories, and both facilities are secured by all the domestic assets of UNOVA.
There have been attempts to reduce borrowings, said Brooks, adding that last month the company completed a revision of its defined-benefit pension plan. The restructuring of the antiquated pension scheme yielded net proceeds of more than $100 million, noted Brooks, which was used to reduce outstanding debt. The commitment level went to less than $200 million, thereby avoiding additional fees and borrowing costs.
UNOVA has suffered from weak operating performance as a result of the slowing U.S. economy and soft-end market demand. Standard & Poor's has the firm on CreditWatch with "negative" implications, and the bank loan rating is a precarious CCC+. Credit Suisse First Boston was hired at one point to examine strategic alternatives, including selling the company, but this plan was terminated, as the UNOVA management's valuation of the company differed from potential buyers.