Morgan Stanley's familiarity with Oppenheimer Holdings' business helped it land the lead spot on the financial services company's first credit facility. "We operate in many of the same businesses that Morgan Stanley does, which facilitated their understanding of the specifics of our business and the issues that we face," said Jeffrey Alfano, cfo.
In July, Oppenheimer entered into a $125 million term loan "B" to pay off the majority of $140 million of exchangeable notes issued by the company's wholly owned subsidiary E. A. Viner International. The notes were used to finance Oppenheimer's acquisition of CIBC World Markets' U.S. private client and asset management divisions in 2003. The notes were exchangeable for 6.1 million Class A non-voting shares on Jan. 2, 2013 at $23.20 a share. The debentures had a 4% coupon in 2006 and a 5% coupon in 2007.
Morgan Stanley's experience in the private wealth management business in particular won over Oppenheimer. "I have worked extensively with Morgan Stanley and have a good appreciation for their capabilities in the credit markets and the depth of their expertise," Alfano said. "Morgan Stanley did an outstanding job in assisting our preparation efforts to go to market with this transaction."
The seven-year facility has an interest rate of LIBOR plus 2 3/4%. It also has a $20 million accordion feature, which the firm can draw upon to pay the remaining $20 million of notes if it is unable to raise this money internally. The facility is backed by collateral at the E. A. Viner International level, Oppenheimer's most senior holding company in the U.S.
Oppenheimer chose to do a bank deal because of its flexibility and good pricing. "The syndicated facility gives us more flexibility and broader access to the market when compared to other financing alternatives," said Alfano.
Toronto, Canada-based Oppenheimer Holdings is an umbrella company for a group of securities brokerage and investment firms, including: Oppenheimer & Co., Oppenheimer Asset Management and Freedom Investments.