J.W. Childs Associates, the Boston-based private equity firm and owner ofAmerican Safety Razor (ASR), is taking a $92 million dividend through a recapitalization. UBS is leading the loan package for the designer and manufacturer of shaving, medical and industrial blades. The latest credit comprises a $25 million five-year revolver, a $200 million first-lien term loan and an $87.5 million, seven-and-a-half year second-lien loan. This also refinances existing debt. Lenders are being offered LIBOR plus 3% on the B2-rated first-lien debt and LIBOR plus 6 3/4% on the Caa1-rated second lien. Syndication of the deal was launched Feb. 9.
UBS had also worked with the company in April when it led a $225 million refinancing that took out higher-priced debt owned by Black Diamond Capital Management (LMW, 4/5). ASR previously had challenges with its cotton and soaps businesses, which have since been divested. Black Diamond bought 60-70% of the debt in the secondary market before being taken out at par last year. J.W. Childs acquired the company in 1999 with a bank deal led by Bank of America and Credit Suisse First Boston. Andrew Bolt, cfo of American Safety Razor, refused to comment. Calls to J.W. Childs' officials were not returned. UBS bankers declined to comment.
Moody's Investors Service has now changed the company's outlook to stable from positive. "The company had been performing well and deleveraging quite nicely, that's why we had assigned a positive outlook," said Kevin Ziets, a Moody's senior analyst. ASR is still expected to maintain or increase its operating gains as the company continues to benefit from the trade-up and innovation strategies of its wet shaving competitors, which are resulting in increased demand for the company's value alternatives. But "the increased leverage at a time of heightened spending behind new product launches and capacity expansion programs will weaken credit metrics and limit prospective debt reduction, thereby delaying upward rating pressure. Therefore, we don't see a grading outlook being likely for the next year to 18 months," Ziets said.