Goldman Sachs is in the market with a $215 million recap for Berkline/BenchCraft that will pay a dividend to Code Hennessy & Simmons. The $35 million revolver and $110 million term loan are being offered at LIBOR plus 2 3/4-3%, while the $70 million second-lien term loan went out at LIBOR plus 6 1/2-7%, a market participant said. The recap increases leverage to 4.8 times.
Berkline/BenchCraft is a manufacturer of upholstered residential furniture and was bought by the private-equity firm in 2002. The furniture industry faces foreign competition, but less so for upholstered furniture, according to Margery Fischbein, v.p. senior credit officer with Moody's Investors Service. "The import competition has been much greater on wood furniture than it has been on upholstery," she notes. "But that is an issue for any furniture industry it's just less pronounced than for wood."
Another potential concern of investors is the creditworthiness of the customers--there have been many bankruptcies at the retail end of the furniture business, a buysider said. But Berkline/BenchCraft has a diversified customer base, Fischbein said. "I wouldn't say they have any particular risk due to the diversity of their customers," she added. Goldman bankers declined comment. Berkline/BenchCraft officials and a Code Hennessy spokesman did not return calls.