Deutsche Bank,Citibank and Morgan Stanley pitched Moore Corp.'s $850 million acquisition facility to investors last week with a $500 million "B" loan priced at LIBOR plus 23/ 4%. The deal backs Moore's $1.3 billion merger with Wallace Computer Services to form one of the world's largest providers of print management services.
One investor suggested pricing on the deal is a bit low considering the shaky printing sector. But he noted that the company has been performing better since revamping its management team in December 2000. EBIT margins are up to 7.3% from negative 1.5% in 2000, according to an official familiar with the company. He added that the company has cut costs considerably since 2000 and the Wallace union should create some synergies. The combined companies will be called Moore Wallace. Bankers on the deal did not return calls.
The credit also includes a $350 million revolver priced at LIBOR plus 21/ 2% and tied to a leverage-based grid, the investor noted. Moore announced last Wednesday plans to offer $400 million of senior notes due 2013 to further back the transaction. Moore will pay $606 million in cash along with about $470 million in Moore's common shares for the acquisition. Moore will also assume about $210 million in debt. Morgan Stanley advised Moore on the transaction. Mark Hiltwein, Moore's executive v.p. and cfo, did not return calls.