A new $280 million deal for insurance brokerage firm Swett & Crawford hit the market last Tuesday. The credit comprises a five year, $20 million revolver; a six year, $190 million "B" term loan and a seven-year, $70 million second-lien loan. Price talk is LIBOR plus 2 3/4% on the revolver and the "B" term loan and LIBOR plus 7% on the second lien. The credit is being led by Deutsche Bank and Credit Suisse First Boston and commitments are due the week of Nov. 1.
Moody's Investors Service has placed a rating of B1 on both the corporate family rating of HMSC Corporation, the parent of Swett & Crawford, and to its first- lien credit facilities. Additionally, a rating of B3 has been placed on the second-lien term loan.
HMSC will be owned by a group of investors, including Hicks, Muse Tate & Furst, Banc of America Capital Investors, Emerald Capital and central Swett & Crawford employees. Swett & Crawford was formerly owned by Aon Corporation.The credit facilities are secured and guaranteed by all assets and subsidiaries of HMSC. Calls to Sweet & Crawford were not returned.
According to Moody's, the ratings on HMSC highlight the company's strong position in the wholesale brokerage market, its expertise in special business lines and steady profit margins. But Swett has never before been a stand-alone company and has experienced significant employee turnover in the past year, as has much of the insurance community. Moody's predicts operating margins in the range of 25-30% and yearly cash flow that is greater than 15% of debt. Swett's debt to EBITDA ratio is expected to be around 3.5 times.