Goldman Sachs landed the lead role on a $260 million financing for Kohlberg & Co.'s acquisition of Stanadyne Corp. after being the sell-side adviser and offering staple-financing for both the bank tranches and senior subordinated notes. "As part of advising the seller they presented a staple financing deal attached to it as they were marketing the property," said Gordon Woodward, a principal with Kohlberg. "Goldman presented an attractive proposal to provide staple financing and we chose to utilize them for that."
Stanadyne makes precision-machined products used primarily on diesel engines and is being bought from American Industrial Partners for $330 million. The financing comprises a $35 million asset-based revolver and $65 million term loan, along with $160 million of senior subordinated notes. All are anticipated to be covenant-light. "Stanadyne is a cyclical business and in our experience it is best to structure companies that are cyclical with both adequate liquidity and financial flexibility to withstand any downturn in financial performance, and a good way to do that is through the absence of maintenance financial covenants," Woodward said. The senior secured credit agreement will not be subject to any financial covenants unless the borrowing base amount falls below levels to be determined.
Woodward declined to comment on price talk on the new facility, but bankers said commitments have already flooded in. Stanadyne currently has a $65 million asset-based bank facility led by GMAC Commercial Finance and $66 million outstanding of high-yield notes that will be refinanced with the transaction. The deal is expected to close next month. Goldman bankers and Stephen Langin, Stanadyne's cfo, did not return calls.