Polyester manufacturer Wellman overhauled its balance sheet with a mix of first-lien and second-lien debt to address significant upcoming maturities. The company had a $150 million synthetic lease that matured in July, $35 million of private placement notes that matured in November and an $80 million receivables securitization facility that matured in March. "What we ended up doing was refinancing substantially all of our debt and contractual obligations and put in a long dated debt structure," said Keith Phillips, Wellman's v.p. and cfo.
"It provides us with substantial liquidity and the maturities go out to 2009 Phillips said." The new facility comprises a five-year, $175 million revolver; a five-year, $185 million first-lien term loan; and a six-year, $265 million second-lien term loan. The revolver is priced at LIBOR plus 21/2%, the first lien carries a spread of LIBOR plus 4% and the second lien is priced at LIBOR plus 63/4%. "I think the pricing was very good and very competitive," Phillips said. Standard & Poor's has given a BB- to Wellman's revolver, a B to the first lien and a B- to the second lien. Moody's Investors Service has given a B1 to Wellman's revolver and first-lien loan and a B2 to the second lien.
"We ended up upsizing the deal by $25 million," Phillips noted. High demand led to the first lien being increased by
$10 million and the second lien by $15 million. Deutsche Bank and J.P. Morgan led the deal. J.P. Morgan was the lead on Wellman's last major deal, a $275 million revolver. "We had an ongoing relationship with Deutsche Bank and they made a proposal to us which indicated that they had a lot of strength in the area and we ended up moving forward with them," Phillips said. The term loan syndicate is made up of substantially all new lenders while the revolver syndicate is comprised of a mixture of new and old lenders, he noted.