Credit Suisse First Boston is set to lead a credit backing the $1.2 billion acquisition of school yearbook and class-ring maker Jostens. CSFB's private equity fund DLJ Merchant Banking III LP is acquiring the company from Investcorp, MidOcean Partners, First Union Leveraged Capital and Northwestern Mutual Life Insurance. Through the transaction, DLJ will pay $500 million in cash and assume $537 million of Jostens' debt and other securities.
A banker familiar with the deal said it was too early to determine the size of the bank deal, pricing or structure. The deal is expected to close by the end of September. Deutsche Bank and Goldman Sachs were hired by Investcorp in April to round up potential buyers for the company and another banker said the two firms were close to joining CSFB to run the bank deal. But it could not be confirmed late last week if the two lenders were officially arrangers on the credit.
Moody's Investors Service noted in a report last week that the substantial increase to Jostens' leverage through the transaction could put pressure on the company's credit quality. But Moody's also noted the company's strong market share, stable demand flow and high barrier-to-entry market. Jostens has been around for over 100 years and it has a historical retention rate of over 90%. For the year ending Dec. 28, 2002, Jostens had net sales of $756 million, EBITDA of $160.9 million and net income of $29.9 million. John Feenan, cfo of Jostens, did not return calls, and a DLJ spokeswoman declined to comment.
Jostens' current debt includes a $150 million revolver, a $58.6 million "A" loan and a $320.7 million "C" piece, all rated B1. Deutsche Bank and J.P. Morgan lead this bank debt, which is priced in the LIBOR plus 23/4-3% range. CSFB and Deutsche Bank officials declined to comment, while a Goldman banker did not return calls.