Jacuzzi Brands has recently completed a $200 million asset-based revolver, a $65 million second-lien term loan and has issued $380 million in new notes, allowing the company to achieve interest rate savings and extend out maturities, said Diana Burton, v.p. of investor relations. The interest rate on the West Palm Beach, Fla.-based company's $403.2 million in bank facilities was set to accelerate in July, with the 63/4% over LIBOR spread targeted to increase by 1/2% each quarter until the October 2004 maturity date.
"We had felt like our hands were a bit tied," Burton said, adding that the company wanted to refinance "before the wolf was at the door." Also behind the timing of the refinance was the receptive bond market, Burton said. With initial borrowings under the credit facility and the new notes, the company repaid its existing facility and is set to redeem its 71/8% senior notes, 111/4% senior notes and 71/4% notes on Aug. 14. The new five-year, $200 million asset-based revolver is priced at LIBOR plus 21/4%. The second-lien term loan is priced at the prime rate plus 5% and the new notes carry a coupon of 95/8%.
Fleet Capital Corp. and Credit Suisse First Boston lead the company's revolver. "We have been with them for many years," said Burton. Hedge fund Silver Point Capital was brought on as the second-lien term loan agent and Fleet and CSFB served as joint placement agents for the tranche (LMW, 7/7). Burton would not comment on how Silver Point became involved in the transaction, but one banker said a second-lien loan is typically sought when a company's assets cannot cover all of its debt.