Deutsche Bank is in the market with a $185 million senior secured, asset-based credit facility for Hines Horticulture, according to Jeff Meister, director of finance. Hines opted to switch to an asset-based deal from a cash-flow deal for several reasons, including better interest rates, as the company is highly leveraged, Meister said. Moody's Investors Service reported the company's leverage at 4.66 times as of last June and assigned a B1 rating to the credit. The new deal, which includes a five-year, $40 million term loan and a $145 million revolver, is priced in the LIBOR plus 21/4-31/4% and LIBOR plus 13/4-23/4% ranges, respectively, Meister explained. Both tranches are tied to a leverage-based grid.
Hines currently has $101 million outstanding in term loans and a revolver for $115 million that increases to $145 million from February through June to accommodate the horticultural company's peak season, Meister said. The company's last completed term loan was priced in the LIBOR plus 33/4% range. The new revolver borrowings are subject to a borrowing base.
Deutsche Bank also leads the Irvine, Calif.-based company's existing credit, Meister said. Several bank lenders are expected to rejoin the new deal, he noted. He stated that Deutsche Bank had a smaller meeting with top lenders on the existing deal before holding the general bank meeting. Lenders on the current deal include Bank of America and Bank of Montreal. Meister did not specify any rejoining lenders.
Credit Suisse First Boston is also raising $175 million through a private placement of eight-year, senior notes for Hines. Proceeds from the placement and the bank debt will go toward refinancing the existing credit, as well as outstanding 123/4% senior subordinated notes due 2005 of Hines Nurseries--an ornamental shrub and plant producing subsidiary. A Deutsche Bank banker did not return calls.