Moog, a manufacturer of precision control components and systems, has refinanced its $75 million term loan and $265 million revolver through lead bank HSBC. East Aurora, N.Y.-based Moog increased the overall size of the credit to repay $120 million in 10% notes completed in 1996, noted Tim Balkin, Moog's treasurer. The bonds became callable on May 1, so the company decided to tap its bank group and increase the loan to $390 million, he said. At the time of the refinancing the company's former term loan had been reduced to $45 million. Moog is basically exchanging 10% debt for 4% debt, Balkin explained.
The new facility comprises a five-year, $315 million revolver and a five-year, $75 million term loan. The credit is priced against a leverage-based grid and has a spread of 13/4% over LIBOR. The company's previous loan was priced 1/4% lower, noted Balkin. He attributed the slight price increase to the added risk the banks assumed under the new credit without the cushion of the notes.
Out of the $280 million outstanding on the new credit, the company has swapped out about $180 million of the debt to lock in a coupon of 4% for at least two years, he added. The pricing is "fair but good," said Balkin. HSBC has been the company's relationship bank for over 50 years, previously through Marine Midland Bank, which HSBC bought. The firm has the "right resources to accommodate our growth," said Balkin. The company added three new banks to the new facility--Citizens Bank, Société Générale, and Comerica Bank.