Crown Holdings' term loan broke above par in the secondary market last week. The deal consists of two tranches a E335 million piece and a $165 million tranche. The term loan broke at 100 1/4. The Euro loan traded down to 100 3/8, while the dollar piece traded up to 100 5/8. A trader said the deal was well subscribed. Deutsche Bank led the loan, which is priced at LIBOR plus 1 1/2%. The deal, which also includes an $800 million revolver, is part of a refinancing package for the packaging products maker.
The term loan was originally split into a E250 million tranche and $250 million tranche. But the Euro loan was increased because the company wanted more of its loan to be in that currency, said a trader.
The company plans to use the proceeds from the new credit facility to buy back or retire up to 100% of Crown European's outstanding second and third priority notes and to refinance its existing credit facilities. It is also using the proceeds from the offering of $500 million of 7.625% senior notes due 2013 and $600 million of 7.75% senior notes due 2015, as well as proceeds from the recent sale of the company's plastic closures business for the same purpose. A call to Timothy Donahue, senior v.p. of finance, was not returned.
In October, Moody's Investors Service upgraded Crown's corporate family rating to Ba3 from B2. The upgrade reflects the company's commitment to reducing debt, but also reflects its continued high leverage and exposure to asbestos lawsuits.