Credit Suisse and UBS launched syndication of a $325 million credit facility for Tube City IMS at a bank meeting last Thursday. The deal comprises a six-year, $150 million last-in-first-out asset-based revolver; a $15 million first-in-last-out asset-based revolver; a seven-year, $20 million synthetic letter of credit and a seven-year, $140 million "B" term loan that is covenant lite, according to a buysider. The LIFO revolver is priced at LIBOR plus 1 1/2% and the FILO revolver is priced at LIBOR plus 2 1/2%. Both the term loan and the LC are priced at LIBOR plus 2 3/4%.
Onex Corp. is using the funds to acquire Glassport, Pa.-based Tube City for approximately $720 million, including equity and debt. At the time the transaction was announced, Moody's Investors Service placed Tube City's ratings under review for possible downgrade in light of the acquisition and higher debt levels. Standard & Poor's rated the new bank debt BB- with a 1 recovery rating and estimated debt to EBITDA leverage to be around five times, pro forma the acquisition.
The company last tapped the market in September 2005 for a $250 million facility from Bear Stearns and CIBC World Markets (CIN, 9/9/2005). Tube City is a provider of on-site steel mill services. Based in Toronto and New York, Onex manages third party private equity investments, as well as a real estate fund and a public market fund. A Tube City spokesman declined comment. Calls to Timothy Duncanson, Onex managing director, were not returned.