J.P. Morgan and Goldman Sachs circled the commitments for National Waterworks' $80 million add-on loan that backs a $110 million dividend payment to equity sponsors J.P. Morgan Partners and Thomas H. Lee Partners. A banker said the new loan priced at LIBOR plus 23/4%. The company already has a $245 million "B" loan and a $75 million revolver. The debt was incurred when National Waterworks was spun off from U.S. Filter in November last year. The debt was originally priced at LIBOR plus 4% but has since been repriced to LIBOR plus 23/4%, said the banker.
Moody's Investors Service originally held a stable outlook on the B1 credit, but that has been changed to negative. "[This] reflects management's decision to re-leverage 11 months after its spin-off from U.S. Filter to pay a special dividend. The term loan add-on and payment of the dividend increases leverage back up to levels similar to its initial capitalization at the time of the spin-off," Moody's notes. Officials at National Waterworks did not return calls by press time.