Quality Distribution, an Apollo Management-controlled trucking company, issued $85 million in floating seven-year senior notes to pay down $70 million in bank debt and to raise money for working capital. Timothy Page, cfo of the Tampa-based company, said the financing was opportunistic. "The market seemed to be very good for this type of security and credit." The notes are rated CCC/Caa2.
In addition to the paydown, the company is also redeeming $7.5 million of Floating Interest Rate Subordinated Term Securities. The company opted for floating-rate securities to replace floating-rate bank debt because it is generally cheaper to finance than comparable fixed-term bonds, said Page. The floaters pay a coupon of LIBOR plus 4 1/2% and were sold at 98. "In the short term, the floating-rate paper is less expensive and gives us more flexibility," he said.
Quality hired Credit Suisse First Boston, Deutsche Bank, Bear Stearns and J.P. Morgan to underwrite the deal, which was largely handled by Apollo, according to Page. All four firms had worked with the company in its last bond sale in November of 2003 and lead the company's bank debt. According to a regulatory filing, Sankaty Advisors, Van Kampen Investments and Ares Management held the bank debt.