Sola International, a San Diego-based eyeglass lens designer and manufacturer, completed a new $225 million credit facility to pay off a Eurobond facility, according to Ron Dutt, Sola's cfo. The deal comprises a six-year, $175 million term loan and a five-year, $50 million revolver. The company had E205 million of bonds with an interest rate of 11% and wanted to get rid of the high cost debt, Dutt said.
"While we do have about 40% of our revenue from Europe, because our home currency is dollars, it presents a lot of confusion in terms of translation when exchange rates are moving all over the place," Dutt added. "Getting out of those was a real positive for us." The company also raised around $120 million in gross proceeds from an equity offering, Dutt said. The equity offering reduces Sola's debt and helps establish the new term facility, he added. The term loan is priced at LIBOR plus 21/2% and the revolver, undrawn at closing, is priced at LIBOR plus 3%. "Our pricing has been very good on our term loan facility," Dutt said. "We were oversubscribed up to $1.3 billion."
UBS and J.P. Morgan led the facility. The company had a relationship with both of those banks in the past, Dutt said. UBS led the issuance of the Eurobond facility. "They were very helpful to us back several years ago when we were experiencing a little more difficultly in the market," Dutt said. "So we called upon them again." J.P. Morgan does all of Sola's currency hedging, Dutt added. In addition, Union Bank of California is the administrative agent for the revolver. About 70 banks signed on to the term facility. "There was a really good caliber of bank participation, which was a plus," Dutt said. UBS, J.P. Morgan, Union Bank of California, Allied Irish Bank, WestPac, Citi National and US Bank comprise the revolver group.
Sola has had five consecutive quarters of strong growth in North America. "The market likes that--it shows some very consistent performance in our biggest market," Dutt said. "We felt it was the right time for Sola to be going into market and having investors and lenders look at Sola."