Airborne Health is back in the market for a $180 million credit facility to refinance existing debt and fund a $73.5 million dividend. The deal, led by BNP Paribas, consists of a $20 million revolver and a $160 million term loan "B." Both tranches are priced at LIBOR plus 3 1/2%, according to a banker.
"Yeah, they had some great success, but everyone is coming out with the same thing," said one investor not involved in the credit. "Last time it came, the deal struggled and now they came back to do a dividend already? Please. It's ridiculous for them to ask." A banker said the credit was already over halfway done and is set to close after Thanksgiving/early December. Senior net leverage is 2.1 times, he said.
The Bonita Springs, Fla.-based company hit up JPMorgan last November for $180 million to fund a dividend as well. Investors "gagged" on it and the deal was eventually cut by $50 million, to comprise a $30 million revolver, a $70 million term loan "B" and a $30 million second lien (CIN, 12/15). Pricing was also increased 75 basis points on the first lien to LIBOR plus 3 3/4% and 50 basis points on the second lien to LIBOR plus 7 1/2%. Call protection of 103, 102, 101 was added to the second lien and the amount of the dividend was reduced by $50 million (12/15). The reason why the company switched lead banks could not be determined.
The credit will be used to refinance approximately $83 million of the company's existing senior secured debt and fund a $73.5 million dividend to shareholders that represents a substantial part of the original investment, according to a Moody's Investors Service release. Summit Partners bought a controlling stake in the company in May 2005. Calls to Joseph Trustey, managing partner at Summit, were not returned.
Airborne Health markets the "Airborne" effervescent health formula that is designed to strengthen the immune system. "I'd never heard of it before the [last] deal came around," said an investor. Moody's rated the credit B2 with a first time corporate family rating of B2. The rating reflects the balance of key quantitative and qualitative credit metrics, overweighing the company's small size, limited history and undiversified product offering. Moody's commented that the small scale and undiversified product offering, both of which are Caa rating attributes, hold down the rating. The company's bargaining power and use of loans to pay a sizable dividend are characteristic of B-level ratings. Offsetting these risks are the solid post-transaction credit metrics for leverage, interest coverage and return on assets. An Airborne spokeswoman did not return calls or an email.