ABN AMRO has fully underwritten a $200 million credit backing The Carlyle Group's $300 million majority stake acquisition of CSX Corp.'s CSX Lines subsidiary. ABN will be shopping a six-year, $175 million "B" term loan and a five-year, $25 million revolver. Marketing to commercial and institutional investors is set for Jan. 14, said Mark London, managing director and co-head of U.S. leveraged finance at ABN. He added that pricing would most likely be determined by the middle of next week. CSX will receive $240 million in cash and $60 million in securities in the transaction. Equity for the acquisition, set to close in this quarter, will come from Carlyle's flagship U.S. buyout fund.
Charlotte, N.C.-based CSX Lines provides domestic ocean liner services and operates in the U.S., Puerto Rico and Guam. The company also owns Horizon Services Group, a cargo management and tracking services unit. London noted that the company is a Jones Act-related shipping company, which means it is regulated and protected in its U.S. port-to-port shipping practices. He explained that this differs from the more volatile international shipping industry. "I think [this] makes it a much less risky deal," he added. The leverage multiple for the company is at 2.5 times, he stated.
The Richmond, Va.- based CSX parent company had been trying to become a more rail-based organization resulting in the spin-off, stated Michael Ward, CSX president. The CSX parent operates a major rail network covering the eastern half of the U.S. The new Carlyle-owned entity will be phased into its new name, Horizon Lines, joining the equity firm's transportation portfolio. A Carlyle spokeswoman confirmed the deal's structure.