The bank debt for Werner Holding Co. continued to languish in the 92-95 range last week after the company disclosed that its largest customer, Home Depot, has informed the company it will purchase its aluminum and fiberglass stepladders directly from China. No trades could be confirmed last week. Prior to the disclosure, the bank debt was quoted in the 101-1013/4 range, according to LoanX.
The step ladder sales represented 16% of Werner's total net sales in 2002 and 12% of net sales through Sept. 30. Home Depot will also review Werner's extension ladder business. The loss of the extension ladder business would potentially have a significant effect on Werner's EBITDA and would likely send leverage up, explained one trader. Larry Friend, Werner's v.p., cfo and treasurer, was unavailable for comment.
The market will continue to see the vulnerability of deals that are subjected to that type of outsourcing, remarked one buysider, adding that manufacturers will continue to move away. "How can manufacturing in this country compete?," said one trader. Other popular loan market credits, Levi Strauss & Co. and Goodyear Tire & Rubber Company are closing plants in North America as both firms work to restructure their operations. Levi recently announced that it would close all off its manufacturing and finishing plants in North America, but its new bank debt was quoted around the 104 level due to the credit's juicy coupon and solid collateral package.