Consolidated Container Co. completed a new credit facility to get more capital flexibility and address a major amortization payment due in June 2005. The new bank deal comprises a $220 million term loan and $45 million revolver, both due in 2008. The financing also includes $150 million of 10 3/4% senior secured discount notes and $45 million of equity from its sponsors--Vestar Capital Partners, Dean Foods Co. and affiliates. "It was really to extend maturities, reduce amortization, get more capital flexibility and put in place a longer-term solution for us," said Tyler Woolson, Consolidated's cfo. "The equity sponsors putting money into the deal is a significant vote of confidence in terms of our deals with vendors and customers."
Consolidated's previous $400 million facility comprised a revolver and four institutional tranches. The interest cost was between LIBOR plus 3 3/4-4 1/4%. Under the new facility the revolver carries a spread of LIBOR plus 3 3/4% and the term loan is priced at LIBOR plus 3 1/4%. In addition, the notes are zero coupon for three years. Deutsche Bank leads the new deal as well as the previous facility. "Two-and-a-half years ago the company was in trouble. There was a violation of covenants a couple of years ago," Woolson noted. "Deutsche Bank has been supportive of us through this whole era where we were turning around and had to work with the banks to restructure things through the fifth, sixth and seventh amendments."
Consolidated's management team was brought in by the equity sponsors in the first quarter of 2002 to turn the company around. Woolson said the most important aspect of the new deal is that the company "got a longer term deal in place that gives us a good period of open road in front of us."