Agricore United will fund an acquisition of a Texas-based feed manufacturing business and refinance existing debt with a new C$150 million term loan led by Scotia Capital. Pricing on the term loan is currently being talked in the range of LIBOR plus 1 3/4-2%. The company expects the loan will rank pari passu with its existing senior secured term debt. A bank meeting was held last Tuesday.
The Winnipeg, Manitoba agriculture business is paying $38.5 million for Hi-Pro Feeds, which is based in Friona, in the Texas Panhandle. Agricore will also refinance an existing C$150 million credit facility set to mature in 2007. "It was convenient to increase the debt and take it out a little bit earlier to pay back the existing facility," said David Carefoot, cfo.
Agricore last tapped the market in 2002 with a C$500 million secured credit facility led by a syndicate of Canadian banks, according to Carefoot. The syndicate included: Scotia, HSBC Bank, Rabobank, CIBC World Markets, National Bank of Canada, Bank of Montreal, Royal Bank of Canada and Société Générale. That deal consisted of a two-year, C$350 million revolver and a five-year, C$150 million term loan. The revolver was used to refinance the company's previous debt and the term loan was used for general corporate purposes.