JPMorgan and National City Bank are leading an upsized facility consisting of a five-year, $175 million revolver for Minneapolis-based fastener manufacturer FastenTech. Michael Elia, senior v.p. and cfo, said the decision to rework the loan was based on "a good market" although he admitted it was "better a couple of months ago."
The previous $115 million revolver was set to expire in 2008. "Our performance has been good and we do have some potential acquisitions we are looking at and thought now was a good time," he said. The old loan was priced at LIBOR plus 2 3/4% based on a grid. Pricing is still being negotiated on the new revolver, he noted.
Elia would not specify what those acquisitions would be, explaining that no acquisition target is far enough along to be specific. On top of holding the money for acquisitions, Elia said it will be used for working capital and general corporate matters. Moody's Investors Service said that on top of acquisitions, the company will use about $17 million to redeem preferred stock owned by former investors.
Moody's assigned a Ba3 rating to the $175 million revolver. The report states that the rating is a result of the company's strong position in a variety of niche specialty markets and its relatively stable performance. It also explained that since Citicorp Venture Capital acquired 80% of FastenTech's stock in 1998, the company has made 11 acquisitions, six in the last 15 months.
The company also has $175 million of senior subordinated notes due 2011 outstanding. JPMorgan and National City led the $115 million revolver and Elia said, "[They] did a good job so we stayed with them."
In the future he said, "We'll continue to stay focused on very highly engineered fasteners and components for industrial businesses. We have a broad base of customers and a broad base of markets from industrial to power generation to the military and we'll continue to maintain that diversification."