Citibank, Bank of America and Merrill Lynch Capital are in the market with a $500 million credit backing GTCR Golder Rauner's acquisition of consumer products provider Prestige Brands. Investors noted that deal revolves around the company's brands. "There are no assets, you own the brands and the formulas," a buysider said. "You have to be comfortable with the value in the brands and management's ability to manage the brands."
The credit breaks down into a $50 million revolver, a $350 million "B" loan and $100 million second-lien loan. Price talk is LIBOR plus 23/4% on the "B" loan, a buysider said. The revolver matures in 2009, while the term loans are due in 2011. The financing also includes $200 million in equity and $210 million of senior subordinated notes. Pro forma senior leverage will be about 4.5 times at closing, with total leverage of around 6.5 times. "The leverage there is not low," one loan investor noted. Aside from an initial drawing of $3.5 million, the revolver is expected to remain undrawn for a year.
The Prestige acquisition is being done through Medtech Holdings, a marketer and distributor of health and beauty care products, which GTCR acquired in February from The Shansby Group. Merrill Lynch Capital, GTCR Capital Partners and TCW/Crescent Mezzanine provided the debt financing on the Medtech transaction. Syndication of the Medtech financing was completed in advance of the Prestige transaction. A Shansby spokesman declined comment on the purchase price.
GTCR is buying Presitge from MidOcean Partners, which built the company with several partners beginning with the acquisition of Prell from Proctor & Gamble in 1999. Goldman Sachs advised MidOcean. Merrill bankers and a B of A spokeswoman declined comment and Citi bankers did not return calls. A GTCR spokesman, Prestige and Medtech officials, and Nicholas McGrane, principal at MidOcean, did not return calls.