UBS launched syndication on a $315 million senior secured credit facility for SVP Worldwide last week. The deal consists of a $75 million revolver and a $240 million term loan. Pricing is LIBOR plus 2 1/2% on both tranches. The facility will be used to refinance debt from the acquisitions of Singer and VSM Group sewing machine manufacturers and fund seasonal working capital build. VSM's acquisition brings with it the brands Husqvarna, Viking and Pfaff.
SVP is a newly created entity owned by private equity company Kohlberg & Co. The private equity group acquired Singer from Singer N.V. in September 2004, and VSM from Industri Kapital in February. The name SVP comes from the first letters of Singer, Viking and Pfaff
"There are questions [about] the volume of people who are buying sewing machines," said one investor looking at the deal. "But it looks like they still do." He commented that the deal appeared "do-able."
Moody's Investors Service rated the proposed facility B1. Outlook is stable. The rating reflects the company's leading market position in the global consumer sewing machine market, but is constrained by its high financial leverage, risks with managing the acquisition of VSM and the challenge of implementing the expected supply chain efficiencies.
Calls to Kohlberg & Co. were not returned. Calls to VSM were referred to SVP and calls to SVP were also not returned. A representative from Singer could not be reached.