Le Nature's originally proposed $200 million bank facility led by Wachovia Bank was shaved down to $150 million during syndication with structural changes, including a second lien loan being introduced before closing. At the time of launch, the credit comprised a $40 million revolver, a $125 million "A" loan, and a $35 million capital expenditure facility, all priced at 41/2% over LIBOR. John Higbee, Le Nature's cfo, said it did not make sense for the company to pay commitment fees on a line that it did not need at this time. "We'd be spending unnecessarily," he added, explaining the reason for the reduction in the size of the credit. Higbee noted Latrobe, Pa.-based Le Nature's would continue with plans to expand the beverage company's plants, but with internally generated funds.
The credit, which refinances existing debt, breaks down into a $100 million revolver and $35 million "A" loan, both with a spread of 41/2% over LIBOR. In addition to reducing the size of the line during syndication, the lenders swapped the capital expenditure facility for a $15 million second lien term loan, priced at a fixed rate of 81/4%. Higbee said the second lien loan was at the request of its syndication agent, The Marshall Group, which presents deals to some small Midwest banks. Those banks have a preference for smaller loans priced at higher rates and do not mind taking a junior position to the larger lenders, he explained. Higbee said Le Nature's was willing to go along with the second lien loan despite the high pricing as "it was the easier way to go." The small loan size meant slimmer commitment and upfront fees, sort of offsetting the spread, he explained. Wachovia led the refinancing, after taking the role over from Fifth Third Bank (LMW, 4/7).