Gardner Denver's new $375 million credit renews and expands the credit line that the company had in place and was used to finance the $223.5 million acquisition of nash_elmo Holdings. "[The credit] helped provide the funds for that acquisition plus some funds available for future capital expenditures, working capital requirements and possibly in the future additional acquisitions," explained Helen Cornell, v.p. of finance and cfo. The acquisition was solely financed with bank debt. "I think it was in part due to the flexibility that it gives us," she said.
"The company generates a lot of cash and we like the ability to repay and then re-access the revolver as future acquisition needs present themselves." Gardner Denver is a manufacturer of air compressors and blowers while nash_elmo makes vacuum technology products.
The new credit comprises a $225 million revolver and $150 million term loan. The previous credit, which comprised a $150 million revolver and $50 million term loan, was set to expire in 2005/2006. "If we hadn't needed the funds for the acquisition it wouldn't have happened exactly at that point in time but it was time to address it as well," Cornell noted. She declined to disclose the spread but said pricing is similar. "The pricing grid was relatively comparable to where we were before," she added. "We're a little more levered with this transaction--the upper end of the grid reflects that."
J.P. Morgan led the new credit; Bank One was the company's previous lead arranger. "This was a continuation with our Bank One relationship," noted Mike Sommer, Gardner Denver's treasurer. "It just happens that those people are now under the J.P. Morgan umbrella." The company previously had nine banks in the syndicate and now has 15.