Georgia-Pacific hit the market last week for $1.25 billion in add-ons to its existing credit. Citigroup, Bank of America and Deutsche Bank held a call for a $250 million increase to Georgia-Pacific's revolver and a $1 billion add-on to its term loan "B." A banker said pricing for the revolver and term loan add-ons will most likely remain the same as the existing deal, at LIBOR plus 2 1/4% and LIBOR plus 2%, respectively.
The add-ons will be used to repay part of the company's existing $2.25 billion second-lien, a banker said. The remainder will be paid back with $1 billion in senior notes, led by JPMorgan and Citigroup. "They are taking out the second-lien paper it's going to hurt a lot of guys," said one portfolio manager. "It was a good play," he said referring to the higher priced loan that some investors are upset is going away. "You lose a big piece of good spread paper," he said, calling it an "extended first lien," because although second lien in priority, it was only carrying a LIBOR plus 3 1/2% coupon.
The company tapped Citigroup, JPMorgan and Deutsche Bank last January for $11 billion in financing to fund its acquisition by Koch. Bank of America was also involved. It amended the credit last February, increasing the revolver by $250 million to $1.75 billion. The amendments also relocated $250 million from the second lien into the term loan "B," increasing it to $5.25 billion. The original credit consisted of a five-year, $1.5 billion revolver; a five-year, $2 billion "A" term loan; a seven-year, $5 billion term loan "B" and an eight-year, $2.5 billion second lien (CIN, 1/13). Pricing on the pro rata and the term loan "B" was originally set at LIBOR plus 2 1/4% and the second lien was priced at LIBOR plus 3 1/2% (1/13).
Based in Atlanta, Georgia-Pacific is a manufacturer and distributor of tissue, pulp, paper, packaging, building products and related chemicals. Calls to Tyler Woolson, cfo, were not returned.