CIBC World Markets pitched an add-on $48 million "B" loan last Tuesday for petroleum transporter The Kenan Advantage Group to back two acquisitions for the Canton, Ohio-based company. A banker familiar with the deal could not offer details about the acquisitions, but he said the four-year add-on piece is priced at LIBOR plus 4%, in line with the existing $45 million "B" loan. The existing credit was executed in April 2001 and also includes a five-year, $15 million revolver and a $45 million "A" loan priced at LIBOR plus 31/2%. First Union National Bank, LaSalle Bank and Key Bank are also agents on the credit.
Kenan services such oil companies as British Petroleum, Marathon Ashland Petroleum and Pennzoil. "[Kenan] is the largest transporter of gasoline in North America and with these acquisitions we will further solidify our position in the marketplace," said Douglas Newhouse, managing partner at Kenan's leading equity sponsor Sterling Investment Partners. He declined to discuss details of the transaction, but he confirmed that Kenan also has a $25 million mezzanine piece in addition to the other tranches.
"They don't take ownership of the gasoline. All they do is truck it," the banker said. He added that gasoline demand is very stable, further stabilizing Kenan's business. Kenan Transport Company and Advantage Management Group merged in April 2001 to form the present entity. This transaction was financed through debt from CIBC, Rice Sangalis Toole and Wilson--a firm that invests subordinated debt and equity capital--and Massachusetts Mutual Insurance. Equity sponsors Sterling, RFE Investment Partners and Aetna Life Insurance also put equity into the merger. A CIBC official declined to comment.