Citigroup and J.P. Morgan were scheduled to launch syndication of a $230 million credit for Werner Ladder last Friday as part of the ladder product company's recapitalization efforts. The deal breaks down into a six-year, $170 million "B" loan with price talk around LIBOR plus 31/4% and a five-year, $60 million revolver with pricing around LIBOR plus 3%, according to a banker. Proceeds from the Ba3-rated deal, existing cash and $20 million from an accounts receivable securitization facility will be used to refinance the $115.4 million outstanding on the Greenville, Pa.-based company's existing facility. In addition, Werner is selling $65 million in preferred stock to private equity firm Leonard Green & Partners. Proceeds will also help redeem $150 million of common stock from the existing Werner shareholders. Larry Friend, Werner's v.p., cfo and treasurer, did not return calls.
Werner's total debt-to-EBITDA will rise to 5.1 times if the stock sale is counted as debt rather than equity, compared to 3.3 times as of last December. Moody's Investors Service noted that the company has delevered in the past, citing that its first leveraged recapitalization in 1997 raised its multiples up to 6.2 times. Leonard Green is buying a 22% stake in the company, decreasing majority shareholder Investcorp's stake from 67% to 51% after the transaction. The Werner family will still hold about 24% of the company. Investcorp and other investors became equity sponsors to Werner in 1997, making them majority shareholders of the company. The existing credit, put in place in 1997, is priced in the LIBOR plus 11/2-23/4% range and is led by Merrill Lynch and Deutsche Bank. A Citi official declined to comment, while calls to a J.P. Morgan banker were referred to a spokesman who did not return calls by press time.