Credit Suisse and CIBC World Markets launched syndication of a $665 million credit facility for N.E.W. Customer Services last Tuesday to finance the approximately $1 billion leveraged buyout of the company by Berkshire Partners.
The deal consists of a six-year, $20 million revolver; a seven-year, $390 million term loan "B" and a seven-and-a-half year, $255 million second-lien term loan. Pricing is being talked between LIBOR plus 2 1/4-2 1/2% for the revolver and "B," and LIBOR plus 5 3/4-6 1/4% for the second lien.
Berkshire is buying the company from TH Lee Putnam Ventures, Freeman Spogli & Co. and the company's management, according to the Washington Post. When TH Lee Putnam and Freeman Spogli invested in N.E.W. in 2004 the company was valued at approximately $370 million.
"They are taking a good company and ruining it," said one investor whose firm is already involved in the existing N.E.W. deal and does not plan to play in this one. "There's too much leverage and a bad debt structure." Leverage is 4.5 times on the first lien and 7.5 times on the second lien.
N.E.W. last tapped the market in June 2005 for a $380 million credit facility led by CIBC. The deal consists of a six-year, $10 million revolver; a six-year, $220 million term loan "B" and a seven-year, $150 million second-lien term loan. Pricing on the revolver and "B" launched at LIBOR plus 3 1/4% and LIBOR plus 7% on the second lien.
Dulles, Va.-based N.E.W. is a provider of extended service plans, buyer protection services and product support for businesses and consumers. Spokeswomen at N.E.W. and TH Lee Putnam declined comment. Calls to representatives from Berkshire Partners and Freeman Spogli, as well as calls to bankers at Credit Suisse and CIBC, were not returned.