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| John Jepsen |
An upcoming maturity led Crompton Corp. to complete a new $220 million credit facility. In conjunction with the new facility, the specialty chemical maker refinanced $500 million in outstanding notes. "Our existing revolver was set to mature in October," noted John Jepsen, v.p. and treasurer. "It's been in progress for a while and we were not going to wait for the very end to get it done. We did not want to have our backs against the wall."
While refinancing the revolver was a matter of necessity, it also allowed the company to straighten out its balance sheet and prepare for the future, Jepsen said. "We were looking at it as securing our financial future by pushing out the maturities and allowing us some time to get the company in order," said Mary Ann Dunnell, Crompton's v.p. of corporate and investor relations. Robert Wood joined the Middlebury Conn.-based company as president and ceo in January and as chairman in April. Dunnell said the refinancing gives the company time to implement some of Wood's plan.
Deutsche Bank leads the credit. Citibank, Bank of America and Credit Suisse First Boston are key players, Jepsen said. CSFB is a new participant but the others have been long-term relationships banks. "[CSFB has] had a consistent calling effort over the last couple of years and were willing to commit to the deal," Jepsen explained.
The new credit facility consists of a $120 million revolver priced at LIBOR plus 2 1/2% and $100 million letter of credit facility at LIBOR plus 3%. The revolver pricing is the same as on the previous credit but the letter of credit facility is priced 50 basis points higher than on the old credit.
Crompton's $350 million of 8 1/2% notes due March 2005 and $150 million of 6 1/8% notes due February 2006 had to be refinanced because the new revolver goes out beyond those maturities, Jepsen explained. The new notes comprise $375 million of 9 7/8% senior notes due 2012 and $225 million of senior floating rate notes due 2010 at LIBOR plus 5 3/4%. The bond sale was led by Deutsche Bank, with CSFB, Citigroup and B of A as co-managers.