JPMorgan is in the market with a $230 million refinancing deal for Oglebay Norton Co. In addition to the refinancing, the credit will be used for the conversion of convertible preferred stock and to provide for capital expansion.
The deal consists of a five-year, $55 million asset-based revolver priced at LIBOR plus 1 1/4% with undrawn fee of 37.5 basis points, and a six-year, $140 million term loan "B" priced at LIBOR plus 2 1/2%. There is also the potential for a $35 million delayed-draw credit available for nine months with an undrawn fee of 137.5 basis points. The deal is set to close next week. Covenants on the new deal include maximum leverage, minimum fixed charge coverage and maximum capital expenditures.
Pricing on the existing $310 million credit was in the range of LIBOR plus 2 1/2% and 4 1/2% for the revolver and LIBOR plus 7% and 9% for the term loan "B," according to a filing with the Securities and Exchange Commission.
Oglebay Norton's recent sale of their marine vessels to American Steamship Co. has enabled them to pay down debt to approximately $160 million on a pro forma basis, according to Michael Lundin, president and ceo, in a release. The lower level of debt allowed the company to reign in better terms.
Moody's Investors Service assigned a B1 rating for the proposed deal and the corporate family rating. Oglebay Norton received a B3 credit rating from Moody's in 2003 after it failed to comply with several covenants on previous credit facilities and also suffered from a weakening profitability (LMW, 5/11/2003). This is the first time Moody's has given Oglebay Norton a rating since it emerged from bankruptcy in January 2005. Calls to Julie Boland, cfo and treasurer for Oglebay Norton, were not returned.