J.P. Morgan and Wachovia Securities have increased the dividend for The Carlyle Group's portfolio company Empi Corp. to $62 million from $47 million. The two banks were leading a refinancing for the company for the dividend as well as to repay $76 million of existing bank debt and redeem a $27.5 million note (LMW, 10/27).
The increase means the company's planned "B" term loan has also been increased to $165 million from $150 million. With the high-yield market very strong and the company's deal getting a fairly positive reception, Empi felt like it should make the move, said Kathryn Kerle, v.p. and senior credit officer with Moody's Investors Service. Moody's lowered its recently assigned ratings to B1 from Ba3 on the company's $25 million revolver, $25 million "A" and "B" loans as a result of the increase in the dividend. The "B" was being shopped at LIBOR plus 31/4% and the pro rata at LIBOR plus 23/4%. It could not be ascertained if pricing had been adjusted to reflect the increased leverage.
The dividend increase represents an approximately 10% increase in the amount of debt the company is taking on, Kerle said. "[This] graphically illustrated from our perspective that the company has more tolerance for debt than we originally understood." Empi, taken private by Carlyle in 1999, is a developer and manufacturer of noninvasive biomedical devices. A Wachovia banker referred calls to J.P. Morgan. A spokesman for J.P. Morgan did not return calls. A Carlyle Group spokeswoman could not provide comment by press time.