Republic National Cabinet Corp. (RNCC) has obtained a new credit facility, which backs the company's buyout by equity sponsor the Cypress Group. The play for RNCC comes as the sponsor increases its focus on the building products sector, a growing part of which is the cabinet business, explained David Spalding, v.p. and chair of the Cypress Group. The cabinet business is very fragmented, stated Spalding. "There clearly are ample properties out there," he noted, adding that there are currently no other specific targets.
The new deal expires in 2008 and comprises a $20 million revolver, a $70 million "A" term loan and a $20 million "B" piece. The pro rata is priced at LIBOR plus 41/ 4% and the "B" tranche is set at LIBOR plus 61/ 2%. Additionally, with only $3 million of the revolver drawn at closing, the new facility offers the company flexibility for capital spending and possibly further smaller acquisitions.
BNP Paribas leads the new credit. The French bank was chosen due to its status as both the incumbent lead on RNCC's former credit facility and an investor in the Cypress Group. Cypress Group prefers to choose its partners to finance its investments, explained Spalding. General Electric Capital Corp., Merrill Lynch and Dymas Capital are also involved in the credit but they are not Cypress Group investors. The Cypress Group currently has $3.5 billion in funds under management in two funds. The first is a $1 billion fund raised in 1995, which is fully invested. The second is a $2.5 billion fund, of which only $1 billion is invested.