The "B" loans for Flowserve and Huntsman International broke last Wednesday at the 101 level. Thursday at close they were both trading between 101.250-101.625. The Huntsman break comes less than a week after lead banks Deutsche Bank and Citigroup reworked the deal. The new facility consists of a $650 million revolver, a $1.730 billion term loan "B" and a $100 million euro term loan "B." The U.S. portion of the loan is priced at LIBOR plus 1 3/4% and the European portion is priced at LIBOR plus 2%. Moody's Investors Service assigned a Ba3 rating to both tranches.
The Flowserve deal consists of a seven-year, $600 million term loan "B" priced at LIBOR plus 1 3/4% and a five-year, $400 million revolver priced at LIBOR plus 1 3/4%. Bank of America leads the deal. Moody's rated both tranches Ba3.
"Sure it was expected," said one investor of the Huntsman break level. "It is a nicely rated company, doing well." Another investor said that although Huntsman has been performing well, it is a cyclical chemical company and he speculated that this could be its cyclical peak. He said he is not surprised at the execution of the Flowserve loan because it is a more stable business. But the company is in the process of restating its consolidated financial statements for the years 2000-2003 and the investor said the only surprise was that the loan market could see past that.
Calls to J. Kimo Esplin, Huntsman cfo, were not returned, nor was a call to Mark Blinn, Flowserve's cfo.