Nellson Nutraceutical has sealed a $285 million credit facility for its acquisition of Montreal-based Bariatrix Products International. The deal comes after Nellson, which makes nutrition bar and powder products, completed a $160 million deal in conjunction with its acquisition by private equity firm Fremont Partners last fall (LMW, 11/18). The new deal also refinances this previous credit.
The new term loan is priced 100 basis points tighter than the previous loan, said Bill Lenihan, principal at the San Francisco-based firm. The credit's $260 million term loan is priced at LIBOR plus 3%, while the previous $145 million term loan had a higher spread of 4% over LIBOR, he stated. Lenihan said the new pricing turned out better than the last time because the company has performed well and exceeded forecasts provided to the original bank group. Furthermore, the Bariatrix acquisition was "strategically compelling," strengthening the new credit. The credit markets have improved, he added. The deal was twice oversubscribed and the six-year term loan was flexed down 50 basis points from the originally proposed pricing of LIBOR plus 31/2%, Lenihan said.
UBS is the sole lead arranger, as it was for the previous credit. BNP Paribas and Goldman Sachs signed on as co-syndication agents and GE Capital is a documentation agent on the facility. BNP Paribas was on the last credit, while Goldman is new to the deal, noted James Halow, a senior associate with Fremont. "We thought [Goldman] would be a good addition," Halow explained, adding that Fremont has dealt with the firm for past transactions unrelated to Nellson.
The credit also has a $25 million revolver that expires in 2007. Pricing on the tranche remains unchanged at LIBOR plus 4%, but it was increased by $10 million from $15 million. The revolver remains undrawn and is in place for general corporate purposes. Lenihan noted that with the Bariatrix transaction, along with Irwindale, Calif.-based Nellson's acquisition of the functional powder business from Cornerstone Nutritional Labs last February, management has accomplished its objective to strengthen its operations and market position within its core nutritional powder and bar businesses.