CommScope has completed a new $100 million revolver amid a tough market for the company's cable product business. The deal was not oversubscribed, said Jerald Leonhardt, executive v.p. and cfo, but he stated that the company did not want more than the $100 million amount. He noted that the company's previous $250 million revolver had been in excess of what CommScope had needed. He said about 20 investors signed onto the last deal, while five signed onto the new credit. "We were very price sensitive," he said, adding that the lead bank, Wachovia Securities, was responsive to the company's interest rate concerns. The deal has a spread of 21/ 2% over LIBOR.
The new facility is undrawn and is in place for future liquidity, working capital needs and general corporate purposes. Leonhardt noted that the three-and-a-half-year deal is priced higher than the previous credit, which was around LIBOR plus 1/2%. Leonhardt explained that the previous line was implemented in 1997, when CommScope was spun off from General Instrument Corp. and the market for cable was more positive. "The market timing was right [back then], . . . the timing was more for borrowers" he stated, adding that the company's ratings have also fallen to speculative grade since 1997. "The current environment is much more difficult," he further noted.
J.P. Morgan led Hickory, N.C.-based CommScope's previous facility, but the company selected Wachovia to lead the new deal. Leonhardt explained that J.P. Morgan was more of an inherited relationship from its time with General Instrument. He added that J.P. Morgan had brought an informal proposal to the table, but CommScope followed through with more formal proposals from Wachovia and other banks. "I think it is helpful to deal with someone we had a previous relationship with," he added. Wachovia was the largest lender on the previous credit, he said. PNC Bank, BNP Paribas, CIBC World Markets and BB&T signed into the new deal with Wachovia. Leonhardt said PNC is an entirely new relationship for CommScope, while BB&T had previously done some non-loan product business with the company. CommScope's total debt is around $183 million, mostly subordinated, Leonhardt stated.