The $220 million financing backing Aurora Capital's acquisition of Douglas Dynamics from AK Steel was set to launch last Friday as LMW went to press. The Credit Suisse First Boston-led facility comprises a $50 million revolver, $120 million first-lien term loan and $50 million second-lien loan. Pricing on the revolver and first lien is LIBOR plus 3%, while the second lien carries a spread of LIBOR plus 61/2%. There is a 50 basis point commitment fee on the revolver.
CSFB has a relationship with AK Steel, according to John Mapes, a partner with Aurora. "They have known the company for a long time and as a result were very familiar with the subsidiary we agreed to acquire," Mapes said. Aurora worked with a small group of lenders who looked at the company and decided to use CSFB based on the relationship and knowledge of the company, Mapes added. "Aurora is committing and arranging north of $100 million of equity and we're delighted to be able to partner up with the existing management team to continue to grow the company," Mapes concluded.
Douglas manufactures snow and ice removal equipment. The company does not have outstanding debt, with all of the debt at the AK Steel level, Mapes said. Total debt-to-EBITDA is 3.2 times. "I'm not sure how you leverage a snow plow company," one buysider said. "That remains to be seen." The terms of the transaction were not disclosed. Aurora won Douglas through an auction process, according to Albert Ferrara, Jr., AK Steel's v.p. finance and cfo. He declined comment on other bidders. "We're very hopeful of having the transaction closed by no later than March 31," Ferrara said.