Bank of New York led a five-year, $400 million revolver for CNF. The provider of global supply chain services for commercial and industrial shipments by land, air and sea, does not generally borrow under its facility, but uses it as a secondary source of liquidity. CNF has a self-insurance program and uses letters of credit in order to back claims relating to workers' compensation and its vehicular self-insurance program.
The company had a $385 million loan in place that would have matured July 2006, but terminated it early. "It's a good time in the marketplace," said Mark Thickpenny, v.p. and treasurer. "We [realized we] could save a significant amount of money by replacing it today and getting better pricing and better terms and rearranged the bank group a little bit."
Pricing for the current facility, which can be increased to $500 million, is on a grid determined by the company's leverage and its debt rating, with CNF receiving whichever is the better deal. Currently, because the company's leverage is low, pricing is at LIBOR plus 50 basis points with a 12 1/2 basis points facility fee. If pricing was set just by rating, pricing would be 87 1/2 basis points over LIBOR for the all in drawn spread. CNF is rated BBB-/Baa3.
CNF increased the syndicate to a dozen banks, adding an international presence with BNP Paribas and Canadian banks, Scotia Bank and Harris Bank. The company would like to grow domestically as well as internationally, specifically in Asia. "That's the fastest growing market right now in terms of international logistics and that is where we want to grow it as well," Thickpenny said. PNC Bank is the co-lead.
The choice of lead banks was based on previous relationships. "I got a lot of support from the banks and the deal went together very well," he said. "Bank of New York did a good job in terms of leading the transaction and I'm looking forward to working with this bank group, with the program that we have, and furthering the relationships."