Morgan Stanley and Bear Stearns are leading a $180 million facility to back private equity player Welsh, Carson, Anderson & Stowe's $377 million acquisition of Ozburn-Hessey Logistics (OHL) from DLJ Merchant Banking. The facility consists of a five-year, $40 million revolver and a seven-year, $140 million term loan. Pricing on both tranches is LIBOR plus 3%. Welsh, Carson is putting in about $149 million in equity.
Based in Nashville, Tenn., Ozburn-Hessey is the country's largest privately-held third party logistics provider. It operates 18 multi-client warehouse campuses and almost 100 facilities in North America. For the past year Welsh, Carson and Jim Martell, the former CEO of SmartMail Services who has over 20 years experience in the logistics filed, have been looking at logistics companies and when it learned DLJ was in the process of having Bear Stearns sell it in the spring, decided to take a look, said an official familiar with the deal. The New York-based private equity company was attracted to Ozburn-Hessey's strong management team and interesting growth sector, an individual close to the transaction said. Morgan Stanley served as Welsh, Carson's M&A advisor. The deal is expected to close in the next week or so. The management team will stay in place and Martell will join the company as a non-executive chairman of the board helping with strategic issues.
Moody's Investors Service assigned a B2 rating to the facility, which reflects a "high expectation of high lease-adjusted leverage, the company's acquisitive nature and high debt on a small fixed asset base with moderate cash flow." Sanjay Swani, a general partner at Welsh, Carson, declined comment. Calls to Gary Kimball, cfo, were not returned nor were calls to a DLJ spokesman.