Goldman Sachs last week hit the market with a $550 million credit facility for United Subcontractors to pay a $125 million dividend to its owners Wind Point Partners, and refinance the company's existing debt and cover related fees and expenses. The deal consists of a $35 million revolver, a $15 million synthetic letter of credit, a $300 million first-lien term loan and a $200 million second-lien term loan, according to an investor. Pricing on the first lien is LIBOR plus 3% and pricing on the second lien could not be determined.
"It's a pretty aggressive deal," said an investor whose firm was already involved in the credit. The company's debt leverage increased to about 4 or 4.5 times, he said. "We have had the dubious distinction of turning that one down again," said another investor, who noted the company's dividend deals as a major contributing factor. USI took out a $90 million dividend at the end of 2005 and a $20 million dividend before that. Standard & Poor's lowered the company's corporate credit rating to B from B+ in connection with the dividend. Goldman officials did not return calls by press time.
USI tapped the market in June 2005 for a $305 million deal led by Royal Bank of Scotland and Citigroup to fund the acquisition of Construction Services and Consultants. The deal was priced at LIBOR plus 2 3/4% and senior leverage was 3.5 times (LMW, 6/24/05).
Salt Lake City-based USI is a provider of residential and commercial insulation and was acquired by Wind Point Partners in 2004. The company is currently listed as one of WPP's portfolio companies that is seeking to make acquisitions, according to the company's Web site. Calls to Nathan Brown of Wind Point Partners were referred to a spokeswoman, who declined comment. Calls to Tim Gallagher, USI cfo, were not returned.