Citigroup and UBS Warburg will be launching a $265 million credit for ALARIS Medical as part of the medication safety device manufacturer's recapitalization plans. Syndication of the facility is expected to be launched in the coming weeks, said William Bopp, senior v.p. and cfo, declining to cite a bank meeting date. The credit includes a five-year, $30 million revolver and a six-year, $235 million "B" loan. Bopp declined to comment on pricing.
The company's last credit was taken out by a high-yield financing two years ago, he noted. That credit included a $60 million revolver, as well as $155 million in term loans priced at LIBOR plus 21/2%. Deutsche Bank led the deal, but Bopp said the bank is not involved in the new facility. "We weren't totally happy with that previous deal," noted Rob Mathews, v.p. of finance, explaining that ALARIS originally dealt with Bankers Trust, but after it merged to become Deutsche Bank the company had trouble with the credit. He said it was a mutual break-up after several amendment negotiations soured the relationship. He added that Deutsche Bank was not invited to bid on the new deal. A Citi official declined to comment, while UBS bankers and a Deutsche Bank spokesman did not return calls.
Bear Stearns and CIBC World Markets are also agent level lenders on the deal, Bopp added, noting that Bear Stearns is a lead on the tender offer with Citi. He said ALARIS selected the lead lenders because of their experience in the market. UBS is not involved in the bond deal, he added. Excellent rates along with the desire for amortizable debt prompted ALARIS to tap the bank debt market now, Bopp explained.
As part of the recapitalization plans, ALARIS is also offering 9.1 million shares of common stock and $210 million in new senior subordinated notes. The ALARIS Medical Systems unit will also merge with its parent, uniting the operating and holding company, Bopp stated. San Diego-based ALARIS expects the restructuring plans to reduce its annual interest expense by about $26 million on a pre-tax basis.