JPMorgan is leading a new term loan and revolver for Wire Rope Corp. of America (WRCA). The facility consists of a three-year, $45 million revolver and a six-year, $165 million second lien. Pricing is LIBOR plus 2 1/2% on the revolver and 7 3/4% on the second lien. The deal launched May 25.
The largest producer of wire rope in North America, WRCA will use the loan for an acquisition and refinance existing debt. Moody's Investors Service assigned a debut B2 rating to the term loan. WRCA is acquiring the stock of Aceros Camesa and other affiliates for $116 million. Aceros Camesa is a Mexican producer of high-carbon wire, wire rope and electromechanical cables. Part of the new facility will also be used to fund a $15 million distribution to shareholders.
Moody's said the rating reflects the cyclicality of the industries WRCA serves and intense global competition. The company emerged from bankruptcy in 2003 and since then has operated with about $40 million of debt and capitalized leases so the increased leverage is "uncomfortably large in proportion to pro forma revenue."
KPS Special Situation Funds created WRCA, a new company, to purchase almost all of the operating assets of Wire Rope Corp. of America to bring the company out of bankruptcy. Elizabeth Low, cfo, did not return calls. Eugene Keilin, a managing principal at KPS, could not be reached by press time.