Dresser went for a complete refinancing instead of going with the originally planned amendments to its existing credit facility to prepare the company to be sold. The $935 million Morgan Stanley and Credit Suisse-led deal launched last Thursday and consists of a $100 million revolver, a $50 million synthetic letter of credit and a $785 million term loan "B." The term loan is priced at LIBOR plus 3%, according to an investor. Pricing on the revolver and LC could not be determined.
The company chose to go with a complete refinancing rather than the amendments "primarily just to get all of [its] debt in one bucket," a spokeswoman said. She also commented that Dresser is looking for "strategic alternatives" in regards to the ownership of the company. Dresser was acquired by First Reserve Corp. during a management-led buyout from Halliburton in April 2001. It is currently a portfolio company of both First Reserve and Odyssey Investment Partners. A First Reserve spokeswoman confirmed it was "pursuing other alternatives" in regards to the company, but declined further comment. Calls to an Odyssey representative were not returned by press time.
The deal will be used to refinance the company's existing debt, including $300 million of 9 3/8% senior subordinated notes due 2011, according to a company release. The company amended its existing facility in September to extend the deadline for filing its 2005 financial statements from Sept. 30, to Dec. 31. Dresser was also seeking to extend the tenor of its revolving credit facility to 2008 and permit a new $50 million synthetic letter of credit, both of which are being taken care of in the new refinanced facility.
The company's existing credit facility was refinanced in March 2004 and consists of a six-year, $125 million tranche "B" senior unsecured term loan and a five-year, $260 million tranche "C" term loan. The tranches are priced at LIBOR plus 3 1/2% and LIBOR plus 2 1/2%, respectively, according to a filing with the Securities and Exchange Commission. Dresser has made numerous voluntary pre-payments to the term loan, with a remaining balance of $70 million between both tranches, according to company releases.
Dallas-based Dresser is a designer, manufacturer and marketer of highly engineered equipment and services for the power industry.