Bank of America is reworking its $350 million credit for Central Parking because bad news and executive changes at the company have banks calling for a pricing increase and changes in the deal's collateral package. Hiram Cox, cfo of the company, resigned Feb. 14, the same day the company announced an invoicing error that reduced fiscal first-quarter earnings and prompted a stock price decline. The company has said Cox's resignation and the invoicing problem are not related. Lenders are concerned because their deal is secured by the company's stock. A bank meeting was set for Friday afternoon, after LMW went to press, to address possible changes that include a switch to a direct collateral deal and a price hike.
The planned seven-year credit was set to close with a $150 million "B" piece priced at LIBOR plus 31/4% and a $200 million revolver priced at LIBOR plus 21/4%. A banker noted that B of A was not planning to re-launch the credit completely. Rather, the plan was to pitch a revised deal to existing ticket holders. Bankers familiar with the deal said a revised agreement would be determined this week. William Vareschi, ceo and acting cfo of Nashville Tenn.-based Central Parking, told LMW the company expects to complete the deal by the end of the week. "We have been working on this refinancing arrangement with the banks since last November and anticipate closing [by the end of the month]," he said. He declined to discuss changes to the new credit. The company must also repay a $10 million revolving credit note with a LIBOR plus 7/8% interest rate by this Friday. The note was used for additional working capital and general corporate purposes.
The deal's security package was set to be revised from a stock-secured transaction with a springing lien to a direct collateral deal, an investor said. Central Parking's stock fell to 17-month lows following the company's negative news. Other issues facing the company include soft demand due to a weak economy and decreasing margins along with pricing levels below management targets, stated Jenny Hubbard, v.p. at Avondale Partners, an investment banking firm also based in Nashville, in a report on the firm.
A company filing cites that Central Parking cannot guarantee its compliance with all of its covenants in future quarters. "The failure of the company to secure refinancing of the credit facility would force the company to secure other forms of financing," the filing states. "Additionally, refinancing the credit with other financing at higher interest rates could impact the company's financial performance." Sun Trust Bank is an agent on the new deal. B of A and Sun Trust officials declined to comment.