Steel Case Cements Credit
Grand Rapids, Mich.-based Steel Case Inc., the world's largest manufacturer of office furniture, closed a $400 million credit facility this month with Citigroup as the lead arranger. Perry Grueber, director of investor relations, explained that following the acquisition of a 100% interest in Strasbourg, France-based Strafor, an office furniture maker with which Steel Case had a joint venture, two credit facilities of roughly $200 million each were in operation. The Michigan company wanted to consolidate to finance future acquisitions.
Strafor had a $208 million euro denominated revolving credit with Natexis Banque Populaire, Citibank and Société Générale, as mandated arrangers. Steel Case also had a $200 million revolving credit, led by Citibank, and consolidating the two, noted Grueber, matches the incorporation of the two businesses and leads to efficiencies. On a drawn basis, the new arrangement is an improvement in terms of pricing and costs on the European facility, he added.
The new facility is a revolving credit, but split into two tranches. Half of the credit is a one-year revolver, priced at LIBOR plus 42 basis points, with a 10 basis points facility fee. The remaining $200 million three-year revolver is priced at LIBOR plus 40 basis points, with an eight basis points fee. There is a utilization fee of 1/8 % if more than 50% of the facility is drawn.
Syndication agent on the deal was SG, with Bank of America, Bank One and BNP Paribas, co-documentation agents. Citibank was chosen, as it had the previous relationship in the U.S., said Grueber. The firm is also considering other forms of financing, such as commercial paper, he said, declining to comment further.