KBUS Holdings, a newly formed company created by an affiliate of middle market private equity firm Kohlberg & Company, completed a five-year, $140 million, asset-based credit to back the acquisition of Coach USA's west and south central operations. The credit comprises a $110 million revolver, as well as a $15 million "A" loan and a $15 million "B" piece, said Gordon Woodward, principal at Kohlberg. The institutional piece was carved out later, he explained, noting that it was not a part of lead arranger Fleet Capital Corp.'s originally proposed deal. "We moved [the debt] because we had a target amount of liquidity for the company in mind," he said.
"We spoke to several banks when we were first looking at the transaction and we selected Fleet Capital," Woodward said, adding that Kohlberg has a long and successful history of working with the lender. The Fleet Securities arm syndicated the credit, while the Fleet Capital arm provided it. "The syndicate was relatively small for a $140 million credit," he stated, adding that there are five lenders in the bank group. The asset-based structure was optimal for the credit because of the substantial value of the acquired bus company operations' vehicle fleet, Woodward said. Fleet also provided letters of credit and cash management products and services to KBUS. Woodward did not cite pricing on the line.
The excess capacity not used to back the acquisition is in place for ongoing operating needs, Woodward said. The gross consideration of the sale of the Coach USA operations was said to be $155 million, according to Coach USA parent, the Stagecoach Group. This is comprised of $128.5 million in cash and $26.5 million in an interest-bearing loan note receivable. The sale by Stagecoach is part of a Coach USA restructuring strategy started in December 2002.