Noveon's ballpark $575 million refinancing term loan, led by Deutsche Bank and Credit Suisse First Boston, was fully subscribed and the company was working to decide on the loan's breakdown between U.S. dollars and Euros last week, said a banker. The original "B" loan was also split between the two currencies. The banker added that there was talk of taking out the company's existing "A" loan with the newly raised debt, but it could not be determined late last week if this is definite.
The six-year credit was expected to end up at the lower end of the LIBOR plus 23/4-3% price talk, an investor said. The deal is basically a pricing amendment, the buysider explained, noting that since there is no call protection for the existing deal, the company is able to take advantage of the market environment to tighten the pricing down up to 75 basis points from the company's existing term loan's spread of 31/2% over LIBOR. A Deutsche Bank official declined comment and a CSFB banker did not return calls.
The refinancing effort for chemical maker Noveon was not in response to any significant debt concerns, as reported in LMW on June 30. This previous article cited a company filing that said Noveon may not be able to generate enough cash flow to service its debt and as a result could undertake alternative financing plans, including a refinancing. But Michael Friday, executive v.p. and cfo, explained that this was not the case and that the statements in the filing were taken out of context. "Now we have got an established track record and we are taking advantage of the margin rates," he said, adding that Noveon wanted to lock in lower rates since it issued debt to back its buyout by an investor group led by AEA Investors and affiliates of DLJ Merchant Banking Partners and DB Capital Partners in February 2001.
Noveon's current credit facility includes, in their original amounts, a $125 million "A" loan, a $125 million revolver and a $510 million "B" loan. A portion of the revolver is available in various foreign currencies, while a portion of the "A" and "B" pieces are denominated in Euros. The "B" loan had $499 million outstanding in both U.S. dollars and Euros, the banker said. The existing revolver is priced off of a grid in the LIBOR plus 23/4% area and includes step down provisions tied to leverage, he noted. The company reported $859.1 million in total long-term debt as of the quarter ending last March.