Tredegar Corp. gained more flexibility with its new $250 million credit line by extending out the term of its revolver. Prior to the new deal, the company had a $100 million, 364-day revolver and a $250 million "A" term loan. "The longer term piece just gives you flexibility," said Andrew Edwards, v.p., cfo and treasurer of Tredegar. He explained that the company would not have to renew the line every year. "We believe this credit facility fits into our needs over the term of the facility," said Edwards, adding that if the company's needs change it could go back to the market for new funding.
The new three-year deal comprises a $175 million revolver and a $75 million "A" term loan. Tredegar was able to push out the weighted duration of its debt. The timing of the new deal was influenced by an April maturity on the company's 364-day facility and significant amortization obligations on the term loan in 2004 and 2005, explained Edwards. The new term loan has small amortization requirements over the term of the loan but has a bullet amortization at the end of the three years.
The new loan is priced against a grid tied to leverage offering spreads from 1-11Ž2% plus LIBOR. Pricing on the former facility was tied to a grid based on the company's quarterly debt-to-total capitalization ratio. The spread ranged from LIBOR plus 3/4-11/4% on the revolver and LIBOR plus 1/2-1% on the term loan. Wachovia Bank is the administration agent on the deal. SunTrust Bank and Bank of America hold the titles of syndication agent and documentation agent, respectively. The banks participated on the company's previous facility. "We just felt like those banks were a good fit for us," said Edwards.