Imperial Sugar opted for a $175 million asset-based facility when it recently revamped its credit line, choosing Bank of America and GE Capital to lead the effort over the incumbent Harris Bank. Darrell Swank, Imperial Sugar executive v.p. and cfo, said the new leads were chosen because the company was pursuing the asset-based credit to capitalize on its hard assets instead of a traditional cash-flow deal. "There's a different universe of lenders that do asset-based lending," he noted. The new leads also brought competitive pricing, an understanding of the industry and a proficient ability to syndicate to the table, added Swank. Calls to a Harris Bank spokesman were not returned by press time.
The new credit comprises a $35 million term loan priced at LIBOR plus 31/4% and a $140 million revolver at LIBOR plus 23/4%. After emerging from bankruptcy in August 2001, the company still had about $200 million of debt through a traditional corporate loan and an off-balance sheet accounts-receivable securitization. With the new credit, the company was able bring all its debt onto the balance sheet and also lower its interest costs that had been inflated to roughly 15% with costly pay-in-kind provisions, Swank noted.
The new credit was completed in conjunction with the company's sale of its Diamond Crystal Brands subsidiary to Hormel Foods Corp. for $115 million in cash. Dixie Crystal, Holly Sugar and Imperial Sugar are among the brands still owned by the company.