Knoll, an office furniture maker, is wrapping up a new facility that is smaller than its previous deal and offers better pricing. UBS Securities and Bank of America underwrote the $450 million credit, which replaces Knoll's existing $500 million facility.
The new facility also allows the company more flexibility on the payment of its dividends. Under the new agreements, Knoll can pay 10 cents a quarter on its common stock, double what it pays now.
The credit facility consists of a five-year, $150 million revolver and a seven-year, $300 million term loan. Both are priced at LIBOR plus 2%. It is expected to close by early October.
Barry McCabe, cfo, said the company chose to tap the bank market because of the better terms it can obtain from banks. He said the office furniture manufacturing industry started to recover in 2004 after three years of a downturn, helping the firm obtain a better deal on its loan agreements. "The company is growing again," said McCabe. "We felt we should have gotten a better price the last time. The industry is moving off a cyclical downturn. We know we can get better deal," he said.
Knoll used the same banks it used for its past deals. UBS underwrote its previous loan. "We have a history with these banks. We feel comfortable with them," said McCabe.
The new credit facility replaces a $75 million revolver and a $425 million term loan. The previous revolver was priced at LIBOR plus 3%. A portion of the new facility will be used to repay the debt under Knoll's existing credit facility.